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Banking industry fails to meet Agri-Credit target in FY19

Pakistan’s banking industry has once again not been able to meet the target of agriculture disbursement of loans by Rs. 76 billion due to the slowdown of economic activities in the sector. This is the second consecutive year that the banking industry as a whole missed to achieve the target by Agricultural Credit Advisory Committee for 2018-19.

According to the State Bank of Pakistan (SBP), commercial banks made disbursements of Rs 1.174 trillion or 94% against the ambitious target of Rs 1.250 trillion set by Agricultural Credit Advisory Committee for 2018-19. During the financial year, the agriculture sector remained beset with water shortages and increased cost of major inputs, which constrained the production of important crops. The agriculture sector also had a disappointing year overall, posting a growth of 0.8 percent during FY19, compared to 3.9 percent last year.

Similarly, the agricultural credit outreach has increased to 4.01 million farmers or 91% against a target of 4.42 million farmers by June 2019, recording a growth of 8% from 3.72 million farmers in June 2018.

To achieve these numbers, SBP adopted a multifaceted strategy and made concerted efforts for pursuing a massive agricultural credit target which included; sensitizing banks to adopt agri. financing as a viable business line, exploring new avenues of financing, value chain financing, mobilizing e-credit, warehousing receipt financing, implementation of crop/livestock insurance and credit guarantee schemes for the farmers etc.

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