KARACHI, Jan 25: The agricultural credit is highly skewed towards the cropping sector, which is receiving the lion`s share of 68 per cent, while the non farm sector including livestock is getting 32 per cent despite the fact that the later contributes 55 per cent to the overall agriculture production, said Governor State Bank of Pakistan (SBP) Yaseen Anwar on Wednesday.

Presiding over a meeting of Agriculture Credit Advisory Committee (ACAC) the SBP governor said that banks should adopt agriculture financing as a viable business model.

It was observed that the mid-year (July-December 2011-12) performance of agricultural credit remained satisfactory as total disbursements registered an optimistic figure of Rs125 billion.

This amount also included an additional Rs5.5 billion by microfinance banks compared to last year`s Rs102 billion for the same period and reflected an overall growth rate of 23 per cent.

An amount of Rs285 billion is the indicative agricultural credit disbursement target for banks and Microfinance Banks (MFBs) for 2011-12 which is 8.4 per cent higher than 2010-11 target.

Anwar said that heavy rains and Hoods in 2010 and 2011 greatly affected the economy in general and agriculture sector in particular. `The credit requirements of farmers have also increased significantly besides adjustment of existing agricultural loans.

Agriculture remains the mainstay with a contribution of more than 21 per cent to the GDP,` he maintained.

The governor said that banks needed to develop a comprehensive agricultural financing policy for settlement, rescheduling and restructuring of loans of the affected borrowers in addition to providing fresh credits for the rehabilitation and revival of the economic activities in the affected areas.

`The federal and provincial governments would also need to initiate support and relief packages for the affected areas,` he said.

He said the crop loan insurance scheme introduced by the government for production loans for five major crops has also supported the sector whereby claims of around Rs800 million have been settied by insurance companies in 2010 and 2011.

Committee formed On the occasion, the governor announced the setting up of an Implementation Committee to ensure timely implementation of the action plan prepared by the ACAC Special Committee that was constituted in December 2010.

The committee will be headed by the Executive Director, SBP and include members from provincial agricultural departments, farmers representatives, Pakistan Banks Association (PBA), ZTBL and SBP Banking Services Corporation.