Credit to farm sector surges

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KARACHI : The State Bank reported on Tuesday that agriculture credit disbursement by banks surged by over 15 per cent in the first 10 months of this fiscal year compared to the same period last year indicating high credit demand.

Bankers said the livestock sector has really accelerated the credit demand as the growth in the sector is higher than the crops production.

Livestock contributed approximately 55.1 per cent to the agricultural value added and 11.6 per cent to GDP in 2011-12. Gross value added of the livestock sector increased from Rs672 billion in 2010-11 to Rs700bn in 2011-12, a growth of 4 per cent.

The agricultural credit disbursement by banks rose 15.7 per cent on year-on-year basis to Rs259bn in July-April period of 2012-13. In absolute terms, disbursement of credit to the agriculture sector increased by over Rs35.2bn compared to Rs223.8bn disbursed in the same period last fiscal year.

During the last five years the disbursement of credit to agriculture sector had increased substantially despite the fact that bank lending to other sectors of the economy had been extremely poor.

The SBP reported that the overall agriculture disbursement by five major commercial banks Allied Bank, Habib Bank, MCB Bank, National Bank of Pakistan and United Bank stood at Rs139bn as compared to Rs120.4bn in the same period of last year, an increase of 15.5 per cent.

Zarai Taraqiati Bank Limited (ZTBL), the largest specialised bank, extended Rs44.2bn in July-April period against Rs43.9bn disbursed in the same period last fiscal year. Punjab Provincial Co-operative Bank Limited (PPCBL) disbursed Rs5.6bn as against last year disbursement of Rs6.35bn.

Fourteen domestic private banks also loaned a combined amount of Rs56.3bn as compared to Rs44bn disbursed during the same period last year.

Five Microfinance Banks including Khushhali Bank Ltd, NRSP Microfinance Bank Ltd, The First Microfinance Bank Ltd, Pak Oman Microfinance Bank Ltd and Tameer Microfinance Bank Ltd disbursed agriculture loans amounting to Rs13.7bn compared to Rs9bn during the same period last year.

The State Bank has provisionally set an indicative agricultural credit disbursement target of Rs315 billion for this fiscal year.

According to Economic Survey of Pakistan FY12, the sector-wise classification reveals that the share of the non-farm sector showed healthy growth and its share in overall agriculture credit disbursement rose to 36.3 per cent in July-March 2012. During the period Rs125.6bn were disbursed to the farm sector while credit disbursement to non-farm sector stood at Rs71.7bn.

Last year, an amount of Rs110.4bn or 65.5 per cent was extended to farm sector and Rs58.2bn or 34.5 per cent was disbursed to non-farm sector.

The attraction in livestock has been increasing also because of higher export from this sector. The export of the meat (beef, mutton and camel meat) has increased from US $108.5m (2010-11) to US $123.6m in 2011-12, showing an increase of 13.9 per cent. The government has planned for the livestock sector to achieve 5 per cent or more growth in meat and 8 per cent or more in milk production through shifting from subsistence livestock farming to market-oriented and commercial farming.

Courtesy: Dawn

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