The State bank of Pakistan (SBP) has said that credit disbursement to the agriculture sector increased by 12 percent on a year-on-year (YoY) basis to Rs1,366 billion in the fiscal year 2020-21 against 2019-20, despite challenges posed by the Covid-19 pandemic and climate change. In a statement issued on Monday, the central bank said that the disbursement is a collective effort of 49 financial institutions which together managed to achieve together 91 percent of their assigned target of Rs1,500 billion for the year. Outstanding agricultural credit stood at Rs628 billion as of June-end 2021, witnessing a growth of over eight percent over end June 2020, which complements the overall positive outlook of the agriculture sector which grew at 2.77 percent during the fiscal year 2020-21. However, the number of agricultural credit borrowers witnessed a decline of five percent, falling from 3.7 million in 2019-20 to 3.5 million in 2020-21, primarily due to limited outreach owing to the ongoing pandemic. During 2020-21, the commercial banks, specialised banks, and Islamic banks posted a satisfactory performance, by disbursing Rs1,210 billion, against their target of Rs1,277 billion, thus achieving 95pc of their assigned disbursement target. However, micro-finance banks as a group achieved 73pc of their target by disbursing agricultural loans of Rs132 billion to small farmers. Likewise, the microfinance institutions/rural support programs collectively achieved 57pc of their target by disbursing Rs23 billion to small and marginalised farmers. The SBP, together with the government and private sector, made concerted efforts for the development and commercialisation of the agricultural sector through the provision of formal financial services. Further, the proactive response by SBP to combat the threats posed by Covid-19 bolstered the economy and resulted in a rather quick rebound in economic activities across all major sectors including agriculture. Besides reducing the policy rate by 625 basis points, SBP also allowed banks to offer principal deferment and restructuring of agriculture loans to help combat economic disruptions. As of April 2021, around 2 million borrowers in the agriculture and microfinance sectors have availed the deferred principal and restructured loan option with outstanding loans amounting to Rs132 billion, said the statement. According to the statement, the SBP’s programmes and policy interventions addressed the cross-cutting issue of food security enabling a regulatory environment, greater inclusion of women, and advancement in farm practices. Further, the SBP facilitated banks’ partnership with provincial Land Revenue authorities for the integration and use of automated land records for loaning. The government’s crop loan insurance and livestock loan insurance schemes also played an instrumental role in encouraging banks to provide loans to small farmers, it added.