Agri financing: NBP, BoP, U Bank emerge among top creditors

National Bank of Pakistan (NBP), Bank of Punjab (BoP), and U Microfinance Bank (U Bank) have emerged as top agri credit performers in FY23.

As per data released by State Bank of Pakistan (SBP) on Wednesday, NBP was the top agricultural credit performer among large banks with a score of 77.4.

BoP scored 60.5, and was ranked the best mid-sized bank for agricultural loan credit disbursement. Meanwhile, U Bank, a wholly owned subsidiary of Pakistan Telecommunication Company Limited – Etisalat Company, was the best performing microfinance bank with a score of 80.4.

The SBP’s scoring model to gauge the agriculture credit performance of banks was adopted by the Agricultural Credit Advisory Committee (ACAC) in its annual meeting for FY2021-22.

As per data released by the central bank on Wednesday, the banking sector as a whole disbursed Rs1,776 billion under agriculture financing during FY23, achieving 97.6% of the agriculture credit target of Rs1,819 billion set by SBP.

Agri financing registered a growth of over 25% year-on-year compared to Rs1,419 billion disbursed in FY22.

Meanwhile, the outstanding portfolio of agriculture credit also registered a growth of 10%, clocking in at Rs760 billion at the end of June 2023 compared to Rs691 billion at end June 2022.

The central bank said that the growth is attributed to the collective efforts of the financial institutions and various initiatives taken in the backdrop of several challenges, “including the devastating floods of 2022, rising input costs and monetary tightening in recent years”.

“Among the various initiatives, SBP’s Champion Bank Model and Agriculture Credit Scoring Model played a key role in supporting financial institutions in extending agriculture financing, particularly in the underserved areas where significant growth was registered in FY23,” the central bank said.

In addition, the strategic guidance of ACAC coupled with rigorous monitoring of financing by SBP provided further support in accelerating agriculture finance, the central bank said.

SBP efforts were further bolstered by the Prime Minister’s Kissan Package, which provided stimulus to revive the flow of agriculture financing especially in the flood affected areas.