See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/286301729

Agricultural Credit in Pakistan: Past Trends and Future Prospects

Article · December 2015

CITATIONS READS
40 10,342

5 authors, including:

Sher Ali Khan Asad Ali

Food Science & Technology, Agriculture Research Institute Macquarie University
26 PUBLICATIONS 412 CITATIONS 22 PUBLICATIONS 202 CITATIONS

SEE PROFILE SEE PROFILE

Abdullah Shalmani
Huazhong Agricultural University
15 PUBLICATIONS 1,397 CITATIONS

SEE PROFILE

All content following this page was uploaded by Abdullah Shalmani on 09 December 2015.

The user has requested enhancement of the downloaded file.

 J. Appl. Environ. Biol. Sci., 5(12)178-188, 2015 ISSN: 2090-4274
Journal of Applied Environmental
© 2015, TextRoad Publication
and Biological Sciences
www.textroad.com

Agricultural Credit in Pakistan: Past Trends and Future Prospects

Abdullah1, Deyi Zhou1, Sher Ali Khan2, 3, Khalil Jebran4, Asad Ali4
1
College of Economics & Management Huazhong Agricultural University Wuhan, P.R China
2
College of Food Science &Technology, Huazhong Agricultural University Wuhan, P.R China
3
Agricultural Research Institute Tarnab, Peshawar, Pakistan
4
University of Malakand, Dir Lower, KPK, Pakistan
Received: July 2, 2015
Accepted: October 25, 2015

ABSTRACT

The goal of this study is to delve the historical trends of agricultural credit flows from formal banking and informal
sector to Pakistani farmers. Both sector played an indispensable role in credit disbursement, but recently formal
sector take the lead in credit provision. Various commercial banks, specialized bank like ZaraiTaraqiati bank and
micro finance banks provide substantial amount of agriculture credit, but their percent augmentation to agriculture
credit remain static. It also subsume discussion concerning obstacles involved in agricultural credit disbursement,
additionally it impart some policy recommendation that will dwindle the impediments face by farmers.
KEY WORDS: Credit Disbursement, farmer, Agricultural production, institutional credit, non-institutional credit

INTRODUCTION

Pakistan is gifted with plenty of natural and human resources such as fertile lands, mountains and lakes, range
of seasons, world best irrigation systems and comparatively more tillable agriculture sector. Agriculture is essential
to economic growth and development in Pakistan. It has been considered as the backbone for economy of Pakistan
since its independence (1947). It is still contributing around 21% to GDP[1] and 43.7% to total employment.
Besides contributing 43.7% in labor force, 66% of the population of Pakistan residing in non-urban places,
depending upon agriculture sector for their income directly or indirectly. The historical growth performance of
agriculture is not consistent; it can be shown in table no 1.Raw materials to the agro based industry of Pakistan are
provided by agriculture sector in addition it also plays an indispensable role in the exports of the country, where
64% of exports are basically based on agricultural raw materials. So any plan to modify theagriculture market will
impact the economic system and a huge section of the population in the country[2].
Agriculture is not only the backbone of our food, livelihood and ecological security system, but is also the very
soul of our self determination[3].The population density of Pakistan is high and is increasing day by day, thereby
reducing the land available for agricultural purposes due to fragmentation or construction of houses. The use of
modern technology has become necessary, so that the increased domestic food demand can be met.
The performance of agriculture in Pakistan remains suppress. Leading factors responsible for sluggish
performance includes, lower rate of technological innovation, slow adoption of modern farming techniques,
problems in timely availability of inputs, low investment in infrastructure, livestock and pest disease problems,
problems in marketing of agricultural goods and trade restriction and insufficient amount of credit available to
farmers.
Credit is a necessary item, because all of our life is surrounded by money, whether it is related to food,
clothing, house, business or agriculture. Credit is the most important thing which is required to run all the activities
of life. Credit plays a critical role in the process of commercialization and modernization of agriculture sector, and
especially of rural economy[4]. The agricultural productivity can only be boosted by the easy and cheap availability
of credit. Meeting the credit requirement of the farming community remained a prime objective of all the previous
governments. The concept of credit in Pakistan’s agriculture is not new, it existed here even before independence,
but at that time most of the farmers to a great extent were depending on the credit, moreover it was rather a non-
institutional form of credit. Total credit disbursed since 1960-61 till 2012-13 is given in table no: 2. Under
Agriculturists Loan Act (ALA) in 1958, credit was mainly provided to support farmers to purchase agricultural
inputs including seeds, fertilizers, cattle and implements to comfort the miserable farmers[5]and increase the
cropped area and change the cropping pattern [6]. In case of Pakistan the impact of agricultural credit on its
production was found positive and noteworthy[7] & [8]. For the improvement of credit disbursement in different

*Corresponding Author: Abdullah, Room No. 617, International Dormitory No. 12 Huazhong Agricultural University, No. 1,
Shizishan Road, Hongshan District, Wuhan 430070, Hubei, P.R.China. E-mail:
[email protected] Cell phone: +8615927636145

178
 Abdullah et al., 2015

regions of the country various efforts have been done. All the private banks were nationalized in the early seventies
and were assigned to disburse agricultural credit.
Agriculture sector has satisfactorily upheld growth to guarantee food security for the ever increasing
population of Pakistan. Nevertheless, the agriculture sector faced challenges such as low returns to farmers because
of high cost of inputs, fertilizers and pesticides. For any business credit is the backbone and the same is the case with
agriculture, which is conventionally remained a non-monetary activity for the rural people of Pakistan. According to
[9] & [10] rural credit can help reduce poverty indirectly by the adoption of new technology and increase of
production, which would lead to betterment of the farmers. The commercialization of rural economy is explained by
the available credit facilities. Agricultural production can be increased easily and quickly through the provision of
agricultural credit. Therefore credit provision to farmers was central in all previous government policies.

Agricultural Credit in Pakistan

The agriculture sector of Pakistan is facing many challenges including water and energy shortages along with
the rising prices of many important inputs such as seeds, fertilizers, pesticides, and obtaining easy loan [11]. For the
most part small farmers are confronting strict conditions and they appear to be unable to live with agriculture sector
[12], they obtain credit depending on their socio-economic conditions [13]; and [14].They need credit to buy seeds,
fertilizer, pesticides, machinery and other necessary inputs. Agricultural credit means credit disbursed to farmers to
meet their financial needs. Agricultural credit has the ability to provide financial resources to farmers, especially for
the purchase of above mentioned things. There are two main sources from which this agricultural credit comes,
either from farmer’s savings or borrowing from some institutions. But as we know, farmers from less developed
countries like Pakistan do not have excess money to save and so they have to depend on formal and informal lenders
including specialized banks such as ZaraiTaraqiati Bank Limited (ZTBL), commercial banks, cooperatives or some
commission agents.
Credit plays an instrumental role in agriculture sector of Pakistan. Farmers are lacking technical knowhow and
finances to carry out the necessary farming practices. If this issue not addressed in an appropriate way can cause
multifold problems including exploitation of poor farmers, slow down in the adoption of modern farming techniques
which will result in sluggish development of this key sector. According to [15] sensing the role of credit in
agriculture sector and its impact on economic growth, [16] and [17] are making very efforts to promote and develop
agricultural finance in the country at reasonable prices. According to [18] the amount of agriculture credit increased
by thirteen fold from 1980-81 to 2001-02. The credit disbursement increased from Rs. 80.2 to Rs. 939 per cultivated
acre and Rs. 84.2 to Rs. 938 per cropped acre form 1980-81 to 2001-02 in nominal terms while in real terms this
increase was from Rs. 80 to Rs. 191 per cultivated acre and Rs. 84 to Rs. 191 per cropped acre during the above
same period. Historically table no. 3 shows the nominal and real credit per cropped hectare and institutional credit as
a percentage of agricultural GDP. A well established network consisting of 26 commercial & micro finance banks
along with 3900 designated branches is operating in the country to provide credit to needy farmers. These banks
include; Allied Bank Limited (ABL), Habib Bank Limited (HBL), Muslim Commercial Bank (MCB), United Bank
Limited (UBL), two specialized banks, ZaraiTaraqiati Bank Limited (ZTBL), Punjab Provincial Corporative Bank
Limited (PPCBL), and 14 private domestic banks. There are also five micro finance banks (MFBs) which provide
credit to farmers for any type of farming activities including crop growing, livestock, poultry, orchards, forestry,
fisheries, nurseries and sericulture. Detail is given in table no: 4

Agricultural Credit Disbursements Trends

Agriculture is central to economic growth and development of Pakistan. The credit requirement of farmers in
Pakistan is increased over time, mainly due to technological advancement and the high use of fertilizers and
pesticides. Due to state bank of Pakistan (SBP) initiative of introduction of annual outstanding indicative target for
banks, the outstanding portfolio of agricultural loans has increased from Rs. 28.1 billion to 312.7 billion, an increase
of 11.2 percent at the end of March 2015 as compared to the previous year. Commercial banks disbursed Rs. 326.0
billion this year as compared to Rs. 255.7 billion last year, which is 27.5 percent higher and is 65.2 percent of the
overall target of Rs. 500 billion. Credit disbursement made by five commercial banks during the above same period
increased by about 25.4 percent from Rs 133.5 billion to Rs. 167.4 billion. Data revealed that total credit
disbursement increased from Rs. 40424.31 million to Rs. 51347.82 million during 1980-81 to 2001-02 showing an
increase of 271.9 percent from 1980-81 to 1990-91, while 243.0 percent from 1990-91 to 2001-2002. There was a
smooth increase in agricultural credit disbursement. It was Rs. 21215.6 million in 1995-96, Rs. 42562.5 million in
1998-99 and Rs. 51347.86 million in 2001-02. Agricultural credit data from 1960-61 till 2012-13 from different
agencies including ZTBL, Cooperatives, Commercial banks and Domestic private banks has been given in table no:

179
 J. Appl. Environ. Biol. Sci., 5(12)178-188, 2015

5. As we know that credit plays an indispensable role in agriculture productivity, so the supply of it had been on the
increase from year to year [19].
Every bank played its role in achieving the goal of credit disbursement. The percentage share of various
financial institutions in formal agricultural credit is given in table no: 6. the banks which achieved individual annual
targets are MCB 80.5 percent, UBL 76.7 percent, HBL 75.3 percent, NBP 55.3 percent and ABL 45.2 percent.
Under the umbrella of specialized banks ZTBL distributed Rs. 56.2 billion, while PPCB distribute Rs. 5.9 billion.
Annual targets for credit disbursement had been set for private, microfinance and Islamic banks. Under domestic
private banks, bank of Khyber has achieved 90.4 percent of its target, Faysal Bank 81.1 percent , JS Bank 64.8
percent , NIB Bank 58.5 percent , Sindh Bank 56.3 percent , Bank Al Habib & Bank Alfalah 54.9 percent each,
Soneri Bank 50.6 percent , Silk Bank 48.8 percent , Summit Bank 46.8 percent while Askari Bank and Bank of
Punjab could achieve only 40.9 percent during July-March 2014-15, however Standard Chartered Bank surpassed its
annual target of Rs. 2.5 billion by disbursing Rs. 3.8 billion during July-March 2014-15. In microfinance category,
seven microfinance banks distributed Rs. 20.7 billion as a group, while under Islamic mode of financing; Four
Islamic banks collectively distributed Rs. 3.7 billion to agriculture borrowers [19].
If we do the sector wise analysis of agricultural credit disbursement, out the total disbursement of Rs. 326.0
billion, 170.0 billion has been given to farm sector, while Rs. 156 billion to non-farm sector during July-march
2015. Credit disbursement to non-farm sector increases from 45.6 percent to 47.9 percent, while farm sector’s share
reduced from 54.4 percent to 52.1 percent. Further the disbursement to farm sector amounted to Rs. 170 billion
which is subdivided as 94.1 billion to subsistence holding, Rs.41.0 billion to economic holding and Rs. 34.9 billion
to above economic holding. In non-farm sector the division is done as Rs. 102.2 billion to large farms and Rs. 53.9
billion to small farms amounting to total of Rs. 156.0 billion. Complete details is given by table no: 7 [19].

Present Problems of Agricultural Credit Disbursement

The sluggish growth in rural institutional lending in Pakistan and in almost all the developing countries of the
world are due to certain factors including high risk of default [20, 21]; difficulty in access to formal credit sources
[22, 23]; inflexibility in formal loan repayment schedule [24]; institutions lacking interest to implement loan
contracts [25];failure to repay loan resulting in loss of respect [26, 27]; both lenders and borrowers have limited
information [28]; inadequate collateral [24, 29, 30]; institutional corruption and inefficiency [31, 32]. Some of the
problems which the Pakistani agricultural credit sector is facing are:

• The most important issue which the policy makers are facing is the lack of efficiency in agricultural credit
disbursement.
• One of the main difficulties faced by the farmers in obtaining agricultural credit from the formal
institutions is documentation and cumbersome procedure; it is considered the prime impediment in
securing loans from institutional sources.
• There is lack of timely availability of credit.
• There is considerable Political pressure in disbursement of the agricultural credit. Institutional credit is not
offered according to the relative efficiency of the farmer but according to the economic and political
power of the credit recipient.
• Formal institutions always ask for collateral when they issue credit. However, majority of our farmers are
resource poor, they do not have anything to offer. This makes cheap credit accessibility difficult for
marginal, sub-marginal and small farmers.
• Banking institutions have difficult credit rules which obstruct small and marginalized farmers from
accessing the loan. Because the credit rules and regulations are very complicated, and these are not clearly
apprehended by illiterate and partially educated farmers.
• There is risk involved in lending to farm sector because of the associated uncertainties and probability of
default. So banks try to avoid it and find other lucrative investments.
• Despite the fact that ZaraiTaraqiati Bank Limited (ZTBL) has played a crucial role in advancement of
agricultural credit to farmers, but still rural farmers hesitate to apply for loan. There are various reasons
accountable for this. For example high interest rate, distance from home to bank, delay in disbursement of
loans, complex procedure, and unlawful demands of officials, no- cooperation of the revenue department
and the biggest being collateral kept for loan.
• The operation of banks has not been extended and so the farmers are provided expensive financial support.
• There is no proper research and no specific policy from the government side on the agriculture credit
requirement. No specific database is available on the current credit needs of the farmers.

180
 Abdullah et al., 2015

• The rate of interest is high on such loans which despite benefiting farmers harm them. Because they have
to pay back the principal loan along with the high interest rate.
Sources of Agriculture Credit
Credit disbursement to smallholder farmers in Pakistan has two fold objectives, first, to reduce poverty and
second to enhance food security, this policy is consistent with other developing countries of the region [33]. In this
regard state bank of Pakistan is authorized by government of Pakistan to advance credit to smallholder farmers at
lower interest rates through different commercial and public banks. However, most of the studies show that majority
of the smallholder farmers; more than 90 percent get their credit from informal sector. There are basically two types
of agricultural loans for farmers these are non-institutional and Institutional sources of credit.
Non-institutional credit:
Informal credit market includes friends, relatives, village shopkeepers, traders, commission agents and many
more. These sources of funds are for short period of time and charge a higher interest rate or can be determined by
mutual agreement. These loans are made available for consumption as well as for the purchase of agricultural inputs.
However, the major problem with these kinds of loans is they are inadequate and non-dependable. These loans have
no proper documentation or others rule and regulations that is why most of the time farmers are facing a tough time
in getting these loans. Furthermore, the data about the amount of informal credit disbursement is limited. Therefore,
it is reasonably difficult to find its share in total agricultural credit supplied. The interest charges against such loans
are also higher as compare to others. However, despite these problems, still informal lenders are playing significant
role in the rural areas of Pakistan since traditional times. Informal sector have comparative advantage in providing
better services at low cost than formal sector. In rural areas rich people have better access to formal source of credit
as compared to poor households because they lack facility of access to adequate formal credit [34] and have to
depend on informal lenders.

Institutional credit:
Formal credits are those credits which are provided through established institutions like ZTBL the commercial
banks, provincial governments’ cooperatives and micro finance banks (MFBs) along with Islamic banks for
agriculture development. According to [35] formal credit almost fulfills 50 percent of the credit needs of the
farmers, while it is assumed that the remaining gap is covered by informal sources. These loans are provided after its
specified procedure and concerned terms and conditions are met.
During the past three decades institutional credit expanded at a higher rate. If we compare the growth rates of
nominal and real credit from mid 1980s to mid 1990s, we came to know that growth in nominal credit was slow
while growth in real credit was negative during the above mentioned period. The institutional credit availability per
crop hectare both in nominal and real terms has increased over time. Formal sources of credit include ZTBL/ADBP
and other commercial banks. There is declining trend overtime in total institutional credit by commercial banks.
After mid 1980s to after mid 1990s a significant shift was observed for institutional credit from fixed capital
investment (like tube wells and tractors) to operational expenditures (like buying of seed and fertilizer). Institutional
credit and agricultural GDP were found to be related positively and significantly. Some important determinants of
agricultural GDP are water availability for irrigation purpose, provision of labor and cropping intensity.
ZaraiTaraqiati Bank Limited (ZTBL)
According to [1] the formerly agricultural development bank of Pakistan now ZaraiTaraqiati bank limited
(ZTBL) is the country’s leading institution which provide various financial services to agriculture sector of the
country. It provides agricultural credit to rural sector which constitutes 62 percent of total population. The bank has
the priority to provide credit to smallholder farmers having landholding up to 25 acre. During 2003 out of total
credit disbursement of Rs. 29653 million, 84 percent about 24909 million has been given to small farmers [36]. The
bank is operating throughout the country with 26 zonal offices, 1441 mobile credit officers (MCOs), 354 branches
and 51 regional offices all over the country to provide agricultural loans to farmers. ZTBL provides services to half
a million farmers annually. Out of total institutional credit disbursement, ZTBL has a share of 28.6 percent. An
amount of Rs. 648.313 billion has been disbursed since March 31, 2010. ZTBL is the leading source of finance for
major inputs including seed, fertilizer, pesticides and insecticides, it also provides support to farmers for the
purchase of tractors and tube wells.
Importance of Agricultural Credit on Productivity
History of modern agriculture has witnessed huge expansion in production. The development of agriculture is
mainly due to the extensive use of credit. Agricultural credit is considered as an important factor in the course of
modernization of agriculture. It creates and maintains adequate flow of inputs, and thus increases efficiency in farm

181
 J. Appl. Environ. Biol. Sci., 5(12)178-188, 2015

production. It makes farmers able to use modern technologies and advanced practices. Credit facilities are vital for
progress of the rural and agricultural development.
Agricultural credit plays a major role to push the production and raises the standard of living of rural farmers
and consequently increasing economic growth and development [10, 37-42].The Agriculture Development Bank of
Pakistan (ADBP) established in 1961. It has been playing a key role in catering to the needs of poor farmers. Under
the umbrella of government, ADBP provide some special schemes such as five loan windows and supervised
agricultural credit system. These loan windows provide different kind of loans including Development Loans,
Production Loans, Cottage Industry Loans, Agribusiness Loans, and Off-farm Income Generating Loans. In order to
enable farmers to purchase modern inputs and technology, state bank of Pakistan give subsidy on agricultural credit
which is quite successful.
The credit provided by ZaraiTaraqiati bank limited (ZTBL) has significant impact on agricultural productivity
[43]. The apex bank of Pakistan from time to time has introduced various banking reforms and also revised policies
to help increase productivity of agriculture sector [7]. According to [44] this can only be achieved by the provision
of credit to farmers. In short, agricultural credit plays integral role in boosting up the speed of agricultural
modernization and economic development.

Conclusion
This study is a kind of literature review in its nature. In this paper we collected previous information about the
agriculture credit disbursed to Pakistani farmers. We found that credit plays a significant role in development of the
economy, adoption of new technology, farm mechanization, increase in productivity, uplift in standard of living of
the farmer and eradication of poverty with respect to Pakistan. Agriculture credit is provided through different
sources including formal and informal sources. Previous studies found many discrepancies in credit disbursement
accounting to, but not limited to cumbersome process for getting loan, political pressure, high interest rate, problems
of collateral, no insurance against natural calamities. The government of Pakistan initiated various programs to
address the issues of farmers, but unable to help them fully. Some recommendations have been put forward to help
needy farmers.

Policy Recommendations
The following recommendations are put forward which need urgent attention of both governmental agencies
and financial institutions to utilize the agricultural credit in an efficient way so that farmers may get maximum
profits and their living standard be improved.

• To increase the accessibility of small and marginal farmer to formal agricultural credit through commercial
banks.
• The procedure for obtaining loan should be made simple in terms of time, acceptance of security,
documentation and disbursement of loan so that farmers feel easy and may avail it.
• Regular supervision and monitoring is necessary so that the credit be used for the right purpose. For this
purpose the financial institution should develop sound tracking and monitoring system and by paying
regular visits to the farmer’s field.
• The rate of interest should be made lower on agriculture credit. Because it often affects the repayment
behavior of the farmer.
• In case of any natural calamity or failure of crop, the period of repayment should be extended at the
convenience of the borrowers.
• Media should be used for the awareness of farmers about the key role of credit, which it has in agriculture
production.
• New and specialized banks should be established to provide easy agriculture loan to the farmers.
• Group financing system should be introduced and promoted, as it reduced the chances of default.
• It is the hallmark of Pakistani politicians to intervene in every matter; this should and must be eliminated, if
we want agriculture credit to disburse in a right direction.
• Credit should be provided on time because in agriculture timing is crucial; otherwise delay will not help
them to get maximum benefits from the credit.
• ZTBL should provide credit to farmers according to their needs and importance of crops.
• The recovery process of the credit should be simple.
• The banks should target and advance loans to small rural farmers, as they are the marginalized section of
the society. In fact banks can reserve special quota for small farmers.

182
 Abdullah et al., 2015

• To increase the know-how of the farmers and to get full utilization of the credit, instructions and training
should be given to farmers. Workshops and seminars may be arranged for this purpose.
• Short run and long run benefit cost analysis before loan provision should be made compulsory.
• A separate research wing in bank is necessary to keep an eye and evaluate the performance of farmers.
• The budget for credit should be increased according to the increase in population and inflation.
• To achieve the desired impact of credit, the requirement of collateral should be relaxed.
• If the collateral requirements are not relaxed due to some valid reasons, the crop may be used as collateral.
• Interest free credit should be given by the Islamic banks to attract the religious minded people.
• The Banks should encourage the use of modern Information and Communication Technology (ICT) such as
mobile phone in disbursement of agricultural credit.
• Commercial banks have always tried to avoid agriculture sector because of the uncertainties, they try to
invest in high profit sectors like industry etc, this behavior of the banks should be discouraged and it should
be made compulsory for every commercial bank to allocate specific amount of their portfolio for
agricultural sector.
• There should be a proper research on the credit needs of the farmers; a database can be developed on
country level, which can further be divided into provincial and district level. Students should be hired on
internship basis from their respective districts and they should be given the task of collecting data on the
credit needs of the farmers. This will not only help the government and policy makers in provision of credit
to the farmers but will also help students by having experience of real research and field work during their
study.
• The interest rate on agricultural credit should be reduced. The purpose of the banks should be development
of the farmers and agriculture sector, not business.

Acknowledgement
We are grateful to an anonymous person for providing suggestions and comments. The authors are fully
responsible for the views expressed in this paper.

REFERENCES

[1]. Ahmed, T. and Z.A. Gill, Role of agricultural credits and efficiency of commercial banks of Pakistan.
International Journal of Agriculture and Biology (Pakistan), 2007.
[2] . Finance Ministry, Economic Survey of Pakistan. 2013-14.
[3] . Saleem, M.A. and F.A. Jan, The impact of agricultural credit on agricultural productivity in Dera Ismail
Khan (District) Khyber Pakhtonkhawa Pakistan. European Journal of Business and Management, 2011. 3(2):
p. 38-44.
[4] . Riaz, A., G.A. Khan, and M. Ahmad, Utilization of agriculture credit by the farming community of Zarai
Tariqiati Bank Limited (ZTBL) for agriculture development. Pakistan Journal of Agricultural Sciences, 2012.
49(4): p. 557-560.
[5] . Ahmad, N., Impact of institutional credit on agricultural output: A case study of Pakistan. Theoretical and
Applied Economics, 2011. 10(10): p. 99.
[6] . Nazir, M., Jan Dawwod ,Saajad Muhammad, Jan Abbas Ullah, Ali Ghaffar, ROLE OF MICRO CREDIT
ADVANCED BY DIR AREA SUPPORT
[7]. PROJECT IN THE DEVELOPMENT OF AGRICULTURE. Interdisciplinary Journal of Contemporary
Research in Business, 2011. 3(8): p. 705-711.
[8] . Iqbal, M., et al., The impact of institutional credit on agricultural production in Pakistan [with comments].
The Pakistan Development Review, 2003: p. 469-485.
[9] . Abedullah, N., M. Khalid, and S. Kouser, The role of agricultural credit in the growth of livestock sector: A
case study of Faisalabad. Pakistan veterinary journal, 2009. 29(2): p. 81-84.
[10] . Abedullah, S.K., K. Mushtaq, and M. Mazhar, Role of credit to enhance cotton production in Punjab,
Pakistan. Pakistan Journal of Agricultural Sciences, 2006. 43: p. 3-4.

183
 J. Appl. Environ. Biol. Sci., 5(12)178-188, 2015

[11] . Sial, M.H., M.S. Awan, and M. Waqas, Institutional credit and agricultural production nexus. 2011.
[12] . Akram, W., et al., Borrowing Behavior towards Institutional Credit in Punjab-A case study of Faisalabad
district. International Journal of Academic Research in Economics and Management Sciences, 2012. 1(5): p.
36.
[13] . Nouman, M., et al., Impact of Socio-Economic Characteristics of Farmers on Access to Agricultural Credit.
Sarhad Journal of Agriculture, 2013. 29(3): p. 469-476.
[14] . Saleem, M.A., Sources and uses of agricultural credit by farmers in Dera Ismail Khan (District) Khyber
Pakhtonkhawa Pakistan. European Journal of Business and Management, 2011. 3(3): p. 111-121.
[15] . Hussain, A. and G.B. Thapa, Smallholders’ access to agricultural credit in Pakistan. Food Security, 2012.
4(1): p. 73-85.
[16] . Khan, I., et al., Agricultural Financing, State Bank and Economic Growth of Pakistan: A Case Study of Allied
Bank Limited, Sargodha Region. 2014.
[17] . SBP, Agricultural Sector Development: Problems and Issues. 2002.
[18] . Government, o.P., Pakistan Agricultural Census 2003.
[19] . Siddiqi, M.W. and K.N. Baluch, Institutional credit: A policy tool for enhancement of agricultural income of
Pakistan. International Research Journal of Arts & Humanities (IRJAH) Vol, 2004. 37.
[20] . Finance Ministry Economic Survey of Pakistan. 2015(Various).
[21] . Rosenzweig, M.R., Risk, implicit contracts and the family in rural areas of low-income countries. The
Economic Journal, 1988: p. 1148-1170.
[22] . Qureshi, S.K., & Shah, A. H., , A critical review of rural credit policy in Pakistan. Pakistan Development
Review 1992. 31(4): p. 781-798.
[23] . Bank, W., Agricultural Credit: Sector policy paper. 1975.
[24] . Rosenzweig, M.R., & Wolpin, K. I, Credit Market Constraints, Consumption smoothing and the
accumulation of desirable production assets in low-income countries: investment in bullocks. . Journal of
Political Economy 1993. 101(2): p. 223-244.
[25] . Qureshi, S., I. Nabi, and R. Faruqee, Rural finance for growth and poverty alleviation. World Bank Policy
Research Working Paper, 1996(1593).
[26] . Azid, T., Credit market in Pakistan: special reference to agricultural sector. Journal ofRrural Development
and Administration, 1993. 25.
[27] . Khan, M.H., M.G. Chaudhry, and M. Mahmood, The Structural Adjustment Process and Agricultural Change
in Pakistan in the 1980s and 1990s [with Comments]. The Pakistan Development Review, 1994: p. 533-591.
[28] . Chaudhari, S., Manash, R.G. , Credit, bribing and the informal credit market in agriculture: a theoretical
analysis. Journal of Development Economics 1996. 51(2): p. 44-449.
[29] . Aleem, I., Imperfect information, screening, and the costs of informal lending: a study of a rural credit
market in Pakistan. The World Bank Economic Review, 1990: p. 329-349.
[30] . Mellor, J.W., Some issues in institutional finance for agricultural development: a cross-national review of
evidence. Pakistan Development Review 1995. 34(4): p. 509-536.
[31] . Khan, R.A.R., Agricultural credit: an accelerator for promoting self-employment in the rural sector in
Pakistan. . 1985.
[32] . Adams, R.H., Non-farm income and inequality in rural Pakistan. The Pakistan Development Review, 1993:
p. 1187-1198.
[33] . Islam, R., J. Von Pischke, and J. de Waard, Small firms informally financed: studies from Bangladesh. Vol.
253. 1994: World Bank Publications.
[34] . SBP, Handbook on best practices in agri/rural finance. 2010.

184
 Abdullah et al., 2015

[35] . Jan, I., et al., Agricultural credit markets in northwest Pakistan: implications for the development policy.
Sarhad Journal of Agriculture, 2012. 28(3): p. 521-529.
[36] . Bashir, M.K. and M.M. Azeem. Credit and the Agricultural Sector of Pakistan. in proceedings of
International Conference on Agriculture: Challenges, Opportunities and Options under Free Trade Regime.
2007.
[37] . ZTBL, Annual Report of Zarai Taraqiati Bank Limited. 2003.
[38] . Bashir, M.K., Y. Mehmood, and S. Hassan, Impact of agricultural credit on productivity of wheat crop:
Evidence from Lahore, Punjab, Pakistan. Pak. J. Agri. Sci, 2010. 47(4): p. 405-409.
[39] . Javed, M.S., et al., Impact assessment of micro-credit programme of PRSP on crop productivity. Pak. J Agri.
Sci, 2006. 43: p. 3-4.
[40] . Jaffar, S., K. Javed, and T. Lodhi, An evaluation of micro credit schemes of small and medium enterprise
development authority (SMEDA). J. Anim. Pl. Sci, 2006. 16(3-4): p. 2006.
[41] . Ayaz, S. and Z. Hussain, Impact of institutional credit on production efficiency of farming sector: A case
study of District Faisalabad. Pakistan economic and social review, 2011: p. 149-162.
[42] . Akmal, N., et al., The Impact of Agriculture Credit on Growth in Pakistan. Asian Journal of Agriculture and
Rural Development, 2012. 2(4): p. 579-583.
[43] . Ahmad, A., et al., Impact of agricultural credit on wheat productivity in District Jhang, Pakistan. Sarhad
Journal of Agriculture, 2015. 31(1): p. 65-69.
[44] . Hussain, A. and M. Taqi, Impact of agricultural credit on agricultural productivity in Pakistan: An empirical
analysis. International Journal of Advanced Research in Management and Social Sciences, 2014. 3(4): p. 125-
139.
[45] . Bashir, M.K. and M.M. Azeem, Agricultural credit in Pakistan: constraints and options. Pakistan J. Life and
Social Sciences, 2008. 6: p. 47-49.

Appendix
Table No: 1 Past growth performance of Agriculture sector in Pakistan
Year Percentage
1960-69 5.1
1970-79 2.4
1980-89 5.4
1990-99 4.4
2000-10 3.2
Source: Federal Bureau of Statistics (Adopted from Economic Survey of Pakistan)

Table No: 2Total Credit Disbursed

Fiscal Year Credit
Disbursed Credit Disbursed (Rs
(Rs. Millions) Fiscal Year Million)
1960-61 103.7 1986-87 15852.3
1961-62 147.81 1987-88 15920.02
1962-63 133.33 1988-89 14477.26
1963-64 129.01 1989-90 13890.04
1964-65 127.54 1990-91 14915.29
1965-66 132.42 1991-92 14479.31
1966-67 195.15 1992-93 16198.11
1967-68 178.66 1993-94 15386
1968-69 141.68 1994-95 21965
1969-70 155.35 1995-96 19102
1970-71 158.38 1996-97 19515
1971-72 128.2 1997-98 32974
1972-73 306.75 1998-99 42847

185
 J. Appl. Environ. Biol. Sci., 5(12)178-188, 2015

1973-74 913.3 1999-00 39688

1974-75 1010.07 2000-01 44789.82
1975-76 1475.79 2001-02 52446.3
1976-77 1657.05 2002-03 58915.27
1977-78 1923.07 2003-04 73444.86
1978-79 2074.4 2004-05 108732.91
1979-80 2859.18 2005-06 137474.4
1980-81 4019.59 2006-07 168830.45
1981-82 5102.76 2007-08 211560.65
1982-83 6075.14 2008-09 233010
1983-84 8359.93 2009-10 248120
1984-85 10286.21 2010-11 263022
1985-86 12685.65 2011-12 293850
2012-13 231037

Source: 1. Pakistan Bureau of Statistics (Adopted from Economic Survey of Pakistan)

2. Ministry of food and Agriculture (Adopted from Economic Survey of Pakistan)
3. State bank of Pakistan (Adopted from Economic Survey of Pakistan)
4. Ministry of Environment (Adopted from Economic Survey of Pakistan)

Table No: 3 Institutional credit as percent of Agricultural GDP and nominal and real credit per cropped hectare
Year Credit to agri Credit per Credit per
GDP ratio (%) cropped Hectare cropped Hectare
(in nominal (in real Rupees)
Rupees)
1971-72 0.67 7.72 23.43
1972-73 1.32 18.12 47.58
1973-74 3.06 49.96 105.8
1974-75 2.84 58.15 100.46
1975-76 3.8 85.89 132.7
1976-77 3.65 94.26 131.65
1977-78 3.79 110.78 141.89
1978-79 3.98 119.15 144.95
1979-80 4.49 154.53 170.7
1980-81 5.23 209.05 209.07
1981-82 5.52 257.41 234.87
1982-83 6 296.06 256.65
1983-84 7.95 415.73 328.7
1984-85 8.51 518.45 392.44
1985-86 9.72 617.3 453.03
1986-87 11.56 748.11 525.58
198788 10 801.41 513.91
1988-89 7.69 649.11 383.82
1989-90 6.82 627.36 348.82
1990-91 6.42 686 336.82
1991-92 5 650.32 289.83
1992-93 5.31 705.22 288.7
1993-94 4.31 704.77 256.12
1994-95 5.03 992.37 317.46
1995-96 4.31 939.15 277.46
1996-97 3.51 919.21 239.39
1997-98 4.83 1421.38 343.83
1998-99 5.76 1844.23 421.61
1999-00 4.83 1656.18 368.22
2000-01 5.5 1999.05 419.16
2001-02 6.55 2318.19 471.16

Source: Adopted from Iqbal et al, 2003.

186
 Abdullah et al., 2015

Table No: 4 Agricultural credit Supplied by Institution (Rs Million)

Year ZTBL Commercial PPCBL Domestic Total
Banks Private
Banks
2003-04 29933.07 33247.42 7563.54 2701.8 73445.83
2004-05 37408.84 51309.78 7607.47 12406.82 108732.9
2005-06 47594.14 67967.4 5889.49 16023.38 137474.4
2006-07 56473.05 80393.19 7988.06 23976.16 168830.5
2007-08 40881.42 94749.91 5931.45 29975.57 171538.4
2008-09 45399.87 74364.6 3538.89 28557.28 151860.6
2009-10 48986.53 119600 3500 28600 200686.5
2010-11 65400 85200 4400 33600 188600
2011-12 66100 107600 6000 37300 217000
2012-13 37800 123700 5400 51000 217900
2013-14 45900 133500 5400 184800
2014-15 56200 167400 5900 229500
Source: State Bank of Pakistan (Adopted from Economic Survey of Pakistan)

Table No: 5 Credit Disbursed by different Agencies (Rs Million)

Year ZTBL Taccavi Cooperatives Commercial Domestic Total
Banks Private
Banks
1960-61 30.9 14.8 58.08 : : 103.78
1961-62 42.7 12.2 92.91 : : 147.81
1962-63 40.7 9.8 82.83 : : 133.33
1963-64 46.7 12 70.34 : : 129.04
1964-65 40.5 30.5 56.54 : : 127.54
1965-66 68 12.7 51.72 : : 132.42
1966-67 100.5 11.2 83.45 : : 195.15
1967-68 106.2 13 59.46 : : 178.66
1968-69 82.1 12.2 47.38 : : 141.68
1969-70 91.3 10.6 53.45 : : 155.35
1970-71 92.7 10.2 55.48 : : 158.38
1971-72 80 8.92 39.08 : : 128
1972-73 168.8 10.23 42.02 85.7 : 306.75
1973-74 415.18 67.5 144.22 286.4 : 913.3
1974-75 395.5 13.13 81.54 520.9 : 1011.07
1975-76 532.19 25.67 91.83 808.1 : 1457.79
1976-77 638.77 13.14 45.74 959.4 : 1657.05
1977-78 430.53 8.8 206.24 1227.5 : 1873.07
1978-79 416.94 12.65 263.71 1381.1 : 2074.4
1979-80 711.55 9.2 601.23 1537.2 : 2859.18
1980-81 1066.62 8.59 1128.25 1816.13 : 4019.59
1981-82 1557.38 8.48 1100.8 2436.1 : 5102.76
1982-83 2310.43 11.42 1414.93 2338.36 : 6075.14
1983-84 3131.68 7.6 1449.89 3770.76 : 8359.93
1984-85 4167.91 6.28 1567.6 4544.42 : 10286.21
1985-86 5307.86 4.62 2048.58 5354.59 : 12715.65
1986-87 6031.15 13.3 2494.75 7313.1 : 15852.3
1987-88 7716.08 9.14 3020.28 5174.52 : 15920.02
1988-89 8667.52 24.93 2730.71 3054.1 : 14477.26
1989-90 9389.86 55.58 815.07 3629.53 : 13890.04
1990-91 8323.95 56.3 3017.45 3517.59 : 14915.29
1991-92 6996.44 56.3 3247.01 4179.56 : 14479.31
1992-93 8643.4 50.8 2978 4525.91 : 16198.11
1993-94 8989.26 : 2621.49 4063.3 : 15674.05
1994-95 14575.74 : 3756.74 4040.79 : 22373.27
1995-96 10339.27 : 3803.38 5044.66 : 19187.31
1996-97 11687.11 : 3431.13 4429.43 : 19547.67
1997-98 22353.6 : 4958.93 6109.7 : 33422.23
1998-99 30175.96 : 5439.97 7236 : 42851.93
1999-00 24423.89 : 5951.23 9312.5 : 39687.62
2000-01 27610.2 : 5124.2 12056 : 44790.4
2001-02 29108.01 : 5127.54 17486.12 592.82 52314.49
2002-03 29270.17 : 5485.39 27738.2 1421.11 63914.87
2003-04 29933.07 : 7563.54 33247.33 2701.8 73445.74
2004-05 37408.33 : 7607.47 51309.78 12406.82 108732.4

187
 J. Appl. Environ. Biol. Sci., 5(12)178-188, 2015

2005-06 47594.14 : 5889.49 67967.4 16023.38 137474.4

2006-07 56473.05 : 7988.06 80393.18 23976.16 168830.5
2007-08 66938.99 : 5931.45 94749.29 43940.92 211560.7
2008-09 75138.55 : 5579.43 110666 41626.33 233010.3
2009-10 79012 : 119609 : 198621
2010-11 65361 : 140312 : 205673
2011-12 66068 : 146271 : 212339
2012-13 37950 : 123675 : 161625
Source: State bank of Pakistan (Adopted from Economic Survey of Pakistan): Not available
ZTBL: ZaraiTaraqiati Bank Limited (Adopted from Economic Survey of Pakistan)
Commercial Banks: Include ABL, HBL, MCB, NBP & UBL (Adopted from Economic Survey of Pakistan)

Table No: 6 Percentage shares of various institutions in formal agricultural credit

Year ZTBL/ADBL Commercial Banks Sub-total Federal Bank for Taccavi
ADBP+Commercilas Cooperatives
1971-72 62.5 0 62.5 30.53 6.97
1972-73 55.03 27.94 82.97 13.7 3.33
1973-74 45.46 31.36 76.82 15.79 7.39
1974-75 39.16 51.57 90.73 8.07 1.2
1975-76 36.51 55.43 91.94 6.3 1.76
1976-77 37.16 56.51 93.67 5.56 0.77
1977-78 20.98 63.02 84 15.55 0.44
1978-79 18.11 60.06 78.17 21.27 0.55
1979-80 23.9 53.44 77.34 22.35 0.31
1980-81 26.66 45.68 72.34 27.45 0.21
1981-82 30.46 47.85 78.31 21.52 0.17
1982-83 38.55 39.23 77.78 22.03 0.19
1983-84 37.27 45.36 82.63 17.27 0.09
1984-85 39.71 45.27 84.98 14.95 0.06
1985-86 41.67 42.51 84.18 15.78 0.04
1986-87 37.99 46.72 84.71 15.2 0.09
1987-88 48.57 33.06 81.63 18.31 0.06
1988-89 60.2 21.55 81.75 18.07 0.18
1989-90 68.87 26.96 95.83 3.76 0.41
1990-91 54.9 25.8 80.7 18.92 0.38
1991-92 51.53 31.08 82.61 16.98 0.42
1992-93 53.92 28.56 82.48 17.2 0.32
1993-94 57.69 26.38 84.07 15.83 :
1994-95 65.54 18.29 83.83 16.17 :
1995-96 48.36 23.72 72.08 27.92 :
1996-97 55.34 21.11 76.45 23.55 :
1997-98 68.08 17.39 85.47 14.53 :
1998-99 70.22 17 87.22 12.78 :
1999-00 64.18 24.4 88.58 11.42 :
2000-01 61.95 27.09 89.04 10.96 :
2001-02 56.18 33.83 90.01 9.98 :
Source: Adopted from Iqbal et al, 2003. : Not available

Table No: 7 Credit Disbursed to Farm & Non-farm Sectors (Rs Billion)
Sector 2010-11 2011-12 2012-13 2013-14 2014-15
A Farm Credit 110.46 125.64 131.3 139 170
1 Subsistence Holding 65.97 70.83 75.7 80.6 94.1
Production 63.97 68.6 71.2
Development 2.82 2.23 4.5
2 Economic Holding 28.68 33.82 35.4 35.5 41
Production 27.94 33.04 33.8
Development 0.74 0.78 1.6
3 Above Economic Holding 15.81 20.98 20.3 23 34.9
Production 15.09 19.07 18.3
Development 0.72 1.91 1.9
B Non-farm Credit 58.23 71.73 99.7 116.7 156
1 Small farms 12.67 19.02 31.7 39.4 53.9
2 Large Farms 45.56 52.71 68 77.4 102
Total(A+B) 168.69 197.36 231 255.7 326
Source: State Bank of Pakistan (Adopted from Economic Survey of Pakistan)

188

View publication stats