KARACHI: Banks have disbursed agriculture loans worth Rs1.36 trillion against the target of Rs1.5 trillion for the fiscal year 2020/21, the central bank reported on Monday.
In a statement, the State Bank of Pakistan (SBP) said the credit disbursement to the agriculture sector increased to Rs1.366 trillion in FY21, witnessing a growth of 12 per cent over FY20, despite the ongoing challenges posed by the Covid-19 pandemic and climate change.
The disbursement is the collective effort of 49 financial institutions, which together managed to achieve together 91 per cent of their assigned target of Rs1.5 trillion for the year.
The outstanding agricultural credit stood at Rs628 billion as of end of June 2021, witnessing a growth of over 8 per cent over end of June 2020, complements the overall positive outlook of agriculture sector, which grew at 2.77 per cent during FY21.
However, the number of agricultural credit borrowers witnessed a decline of 5 per cent, falling from 3.7 million in FY20 to 3.5 million in FY21, primarily due to the limited outreach, owing to the ongoing pandemic.
During FY21, the commercial banks, specialised banks, and Islamic banks posted a satisfactory performance by disbursing Rs1.210 trillion, against their target of Rs1.277 trillion; thus, achieving 95 per cent of their assigned disbursement target.
However, the microfinance banks as a group achieved 73 per cent of their target by disbursing agricultural loans worth Rs132 billion to small farmers. Likewise, the microfinance institutions/rural support programmes collectively achieved 57 per cent of their target by disbursing Rs23 billion to small and marginalised farmers.
The SBP, together with the government and private sector, made concerted efforts for the development and commercialisation of the agricultural sector through the provision of formal financial services.
Further, the proactive response by the central bank to combat the threats posed by the Covid-19 bolstered the economy and resulted in a rather quick rebound in the economic activities across all major sectors, including agriculture.
Besides reducing the policy rate by 625 basis points, the SBP also allowed the banks to offer principal deferment and restructuring of agriculture loans to help combat economic disruptions.
As of April 2021, around two million borrowers in the agriculture and microfinance sectors have availed the deferred principal and restructured loan option with the outstanding loans amounting to Rs132 billion.
The SBP’s programmes and policy interventions addressed the cross-cutting issue of food security, enabling the regulatory environment, greater inclusion of women, and advancement in farm practices.
Further, the central bank facilitated the banks’ partnership with provincial land revenue authorities for the integration and use of automated land records for loaning.
The government’s crop loan insurance and livestock loan insurance schemes also played an instrumental role in encouraging banks to provide loans to small farmers.
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