Agriculture credit: disbursement declines four percent in first half
KARACHI (January 26, 2011) : Commercial and specialised banks have achieved only 38 percent of agri credit disbursement target during the first half of current fiscal year 2010-11 (FY11). Year on Year (YoY) basis, the disbursement during the period also remained some 4.38 percent less than the same period of last fiscal year.
Sources in banking sector told Business Recorder on Tuesday that slow economic activities and deadly floods across the country last year had seriously affected agricultural activities in three provinces Punjab, Sindh and Khyber Pakhtunkhawa, resulting in decline of the credit disbursement under this head. Although, banks have started operations in most parts of the flood-affected areas, however, the first priority of the affected families is to rebuild their destroyed houses.
“Presently, growers in the flood-hit areas are engaged in reconstruction of their houses and it is expected that they would start borrowing for agricultural purpose in the second half after which credit disbursement will gear up,” sources added. The State Bank of Pakistan’s (SBP) latest statistics revealed that in absolute terms, disbursement of credit to the agriculture sector decreased by 4.38 percent or Rs 4.647 billion to Rs 101.611 billion in July-December 2010 when compared with total disbursement of Rs 106.26 billion in the same period last year. Although, the disbursement is still on negative side but it is much better than the first five months of the quarter, as the decline was 10 percent in July-November 2010.
Total disbursement during July-December 2010 is some 37.63 percent of indicative target of Rs 270 billion set by the State Bank of Pakistan for FY11. Sharp decline in disbursement has been registered by Zarai Taraqiati Bank Ltd and five major commercial banks, while agricultural credit disbursement by Punjab Provincial Co-operative Bank Limited, some leading commercial banks and other 9 domestic private banks has posted some increase in disbursement.
Overall credit disbursement by five major commercial banks including Allied Bank Limited, Habib Bank Limited, MCB Bank Limited, National Bank of Pakistan and United Bank Limited has registered a decline of about one percent during the first half of current fiscal year.
Agricultural credit disbursement by five major commercial banks stood at Rs 55.052 billion in July-December 2010 compared to Rs 55.391 billion in the same period of last year, depicting a decrease of Rs 339 million. During the period Allied Bank Limited performed well as it has disbursed Rs 8.305 billion (up by 12.63 percent) and it also achieved about 52 percent of its target of Rs 16 billion for the current fiscal year.
With an increase of 4 percent, Habib Bank Limited disbursed Rs 13.03 billion, MCB Bank Rs 10.136 billion (down by 4.46 percent), National Bank of Pakistan Rs 17.209 billion (decline by 3.42 percent) and agricultural credit disbursement by United Bank Limited stood at Rs 6.371 billion (decrease by 10 percent) from Rs 7.044 billion.
Agri credit disbursement by Zarai Taraqiati Bank Limited, the largest specialised bank, has posted a decline of 31 percent or Rs 9.4 billion during July-December 2010, as it disbursed a total of Rs 20.979 billion in first half of the current fiscal year compared to Rs 30.424 billion disbursement in the same period last year. The ZBTL has completed 25.65 percent of its target of Rs 81.8 billion.
The credit disbursement by Punjab Provincial Co-operative Bank Limited (PPCBL) and 14 private commercial banks has surged by 28.45 percent and 25 percent respectively. Disbursement by PPCBL stood at Rs 2.927 billion in first six months of the current fiscal year compared to Rs 2.279 billion in corresponding period of last year. In addition, 14 domestic private banks also disbursed a combined Rs 22.651 billion in first half of current fiscal year against disbursement of Rs 18.165 billion in same period of last fiscal year, depicting a surge of Rs 4.48 billion. It may be recalled that the State Bank of Pakistan has enhanced agricultural credit disbursement target by Rs 10 billion and set an indicative target of Rs 2,270 billion for the FY 2011.