Banks gave the agriculture sector loans worth Rs1,215 billion during fiscal year 2019-20, said the central bank on Tuesday.
This was 3.5% higher than the previous fiscal year but still fell short of the credit target of Rs1,350 billion set by the Agricultural Credit Advisory Committee in November 2019.
Some factors which have limited the growth of agricultural credit include the COVID-19 pandemic, locust attacks and water shortages which resulted in low production of cotton and sugarcane.
Total unpaid agricultural loan increased to Rs581 billion at the end of the fiscal year, which was a 3.3% growth compared with last year’s Rs562 billion. The number of agricultural borrowers declined, however, from 4.01 million at the end June 2019 to 3.74 million by the end of June 2020 due to the lockdown.
Analysis said that during the last fiscal year, five major commercial banks collectively gave agriculture loans of Rs708.3 billion or 100.5% of their annual target of Rs705 billion. Specialized banks disbursed Rs71.1 billion or 62.9% of their annual target of Rs113 billion and fourteen domestic private banks as a group achieved 88.7% disbursement of Rs225 billion against their target of Rs253.6 billion. The five Islamic banks as a group achieved 76.6% of their annual target of Rs55 billion by disbursing Rs42.1 billion which is 6.1% higher.
Similarly, the Islamic windows of commercial banks disbursed Rs43.5 billion or 79.2% against the target of Rs55 billion in FY 2019-20 which is 33% higher from Rs32.7 billion made during last year.
The agriculture credit of the microfinance sector remained relatively low due to COVID-19 lockdown in the second half of FY 2019-20. Microfinance banks as a group achieved 75.7% by disbursing agriculture loans of Rs139.3 billion to small farmers which is 9.5% lower than the disbursement of Rs154 billion during the same period last year.
Likewise, the microfinance institutions or rural support programs collectively achieved 73.4% of their targets by disbursing Rs28.9 billion but this was 15% lower than the disbursement of Rs34 billion made last year to small and marginalized farmers.