KARACHI: HBL, Bank of Punjab, Bank Islami and U Microfinance Bank stood first in their categories in agriculture-credit performance FY22 as shown by the annual ranking of banks released by State Bank of Pakistan (SBP).
As per the agriculture credit scoring model’s results for FY22, HBL ranked on top among large banks category with a score of 75.4, Bank of Punjab scored 62.1 and ranked highest among mid-sized banks, and Bank Islami stood first among small banks with a score of 55.7. In addition U Microfinance Bank ranked the highest among Microfinance Banks with a score of 80.4.
During FY22, the financial institutions managed to disburse Rs1,419 billion to the agriculture sector compared with the disbursement of Rs1,366 billion during FY21 whereas the outstanding agriculture credit recorded an encouraging growth of over 10% and reached Rs691 billion by the end of June 2022.
The unprecedented disbursement and growth in the agriculture credit portfolio were supported by various recent initiatives of SBP to promote agriculture credit and financial inclusion in the country.
One of the major recent initiatives of SBP was the introduction of a comprehensive agriculture credit scoring model to bring the focus of banks towards improving qualitative aspects and regional distribution of agriculture financing in the country.
The model, adopted by the Agricultural Credit Advisory Committee, provides individual scores reflective of each bank’s agriculture credit performance against multi-dimensional criteria based on various indicators including sectoral disbursement, regional performance, outstanding amount, outstanding borrowers, etc.
Recently, growth in agriculture credit disbursement remained subdued due to various challenges such as adverse climate change effects, resource constraints in banks, underutilization of approved limits by borrowers, etc., while a few banks, particularly large public sector banks, among others, also performed slower than usual and struggled to achieve their assigned annual targets.
It is pertinent to note that the State Bank of Pakistan (SBP) has assigned an annual agriculture credit disbursement target of Rs1.8 trillion to the financial institutions for FY23 to cater to the agriculture credit demand.
