KARACHI: The State Bank of Pakistan (SBP) has said that the disbursement of agriculture credit fell to Rs41.6 billion during the first quarter of FY11 [fiscal year 2010-11] from Rs44.1 billion in the corresponding period last year due to slow credit off-take in farm credit and recent floods. In its latest report on quarterly disbursement of agriculture credit released recently, the central bank said that during the quarter, banks had disbursed only 15.4 per cent of the proposed target of Rs270 billion in FY11.
The SBP had failed to achieve the farm disbursement target of Rs260 billion in FY10 and was able to disburse Rs248 billion during the fiscal year. Growth rate of agriculture credit disbursement dropped to a 10-year low of 6.5 per cent in FY10. During the first quarter of FY11, the bank-wise break-up of agriculture credit disbursement revealed that five major banks as a group disbursed Rs25.9 billion, or 19.6 per cent, of their whole year’s targets. The proposed target for five commercial banks was set at Rs132.4 billion.
The state-owned Zarai Taraqiati Bank Limited (ZTBL) disbursed Rs5.3 billion, or 6.5 per cent, out of its target of Rs81.8 billion, Domestic Private Banks (DPBs) disbursed Rs9.4 billion, or 19.2 per cent, of their targets of Rs48.9 billion and PPCBL disbursed Rs1 billion, or 14.5 per cent, of its allocated target of Rs6.9 billion.
The comparative position in the corresponding period reflects that performance of DPBs and PPCBL in terms of disbursements have shown some improvement, whereas, five major commercial banks’ disbursement as a group remained in line with its last year disbursement trends, the report said. However, the performance of ZTBL showed a declining trend as its disbursement decreased to Rs5.3 billion from Rs9.9 billion, it added.
“The main reason for the low disbursement is the devastating affect of the recent floods, which badly affected commercial banks’ performance, in general, and ZTBL’s, in particular, due to its massive outreach in the country,” the report said.
It also said that the province-wise distribution of credit shows that Rs36 billion was disbursed in Punjab during the quarter and its share in total agriculture credit disbursement increased to 86.6 per cent from last year’s 83 per cent.
Banks disbursed Rs4.3 billion in Sindh and Rs1.1 billion in Khyber Pakhtunkhwa and their shares declined from 13.2 per cent to 10.2 per cent and from three per cent to 2.7 per cent, respectively. The share of other provinces and regions remained negligible in agriculture credit due to low absorption capacity, law and order situation and inadequate supply of credit, it added.
“Sector-wise classification reveals that the decline in agriculture credit was due to slow credit off-take in farm credit due to the recent floods, whereas the flow of credit to non- farm sector showed partial improvement,” the report said. Out of the total disbursements of Rs41.6 billion, Rs26.1 billion, or 62.7 per cent, was disbursed to farm sector and Rs 15.5 billion, or 37.3 per cent, to non-farm sector.
Last year, Rs29.7 billion, or 67.3 per cent, was extended to the farm sector and Rs14.4 billion, or 32.7 per cent, was disbursed to non-farm sector, the report said. The share of non-farm sector showed increasing trend and its share in the total credit disbursements increased from 17.4 per cent in 2006/07 to 37.1 per cent in 2010/11.
The major sources of sustained rise in the disbursement in this sector are livestock, poultry and fisheries sub-sectors, respectively. High prices of meat, fish and export of livestock attracted investment in non-farm sector.
The recovery of the banks has been improved during the quarter as they recovered Rs49.8 billion, or 61.5 per cent, of recoverable amount of agriculture loans against Rs40.6 billion, or 56.9 per cent, recovered during the same quarter last year.
Input from Agencies