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Tuesday, June 22, 2021

Increasing agriculture loans and decreasing output needs probe

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Pakistan Economy Watch has said that agricultural output is declining despite phenomenal increase in farm loans. Banking sector is progressing at a rate of 14.5 per cent due to ineffective control of regulators and it has started playing havoc with masses.

Secretary General of Pakistan Economy Watch Azmatullah has said that the number of financial institutions has been increased and now some are left with no option but to attract business through negative tactics. “Some banks are offering 16-18 per cent profits on certain deposits while the innocent accountholder gets 10-11 percent profit. The State Bank of Pakistan knows about it but prefers to turn back on such issues.

Banks should stop misguiding masses, depositors about profits
Banks should be pressed to inform accountholders about real interest rates and proper legislation should be carried out for it. “When PTA can ask cellphone companies to come up clear about tariff, the SBP can also do it,” he said.

He said that banks were given agricultural loan disbursement target of Rs200 billion in last fiscal which has been revised upward by Rs50 billion to Rs 250 billion for 2009. Banks distributed Rs212 billion in 2007-08 which was Rs43 billion more as compare to 2006-07.

Banks always claims to surpass loan disbursement targets but the output in farm sector is on the decline which speaks of some problems in the system. Some influential get agricultural loans on less interest and use money for other purposes. Banks claim that farmers returned 83 per cent loans last year while the ration was 92 per cent this year. On the other side banks say to have dared defaults of 26 billion in non-agri loans in the first six months of current year which has cut their profits by 20 percent. The total infected loans have reached 194 billion.

Azmatullah said it is amazing that other sectors are failing to honour their commitments and obligations while agricultural sector is reimbursing loans. If other sectors are hurt by increase in discount rate than agricultural sector is bound to receive the same shocks.

At the occasion, Dr. Murtaza Mughal, President, Pakistan Economy Watch said that banks should cut their Rs 58 billion administrative expenses which have registered an increase of 25 per cent this year. The cut will increase profit of banks projected at nine per cent and will ultimately help masses.-Pak Economy Watch

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Rubab Saleemhttp://www.rubabsaleem.com
Rubab Saleem is Editor of Pakistan Times
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