Professional Documents
Culture Documents
farming, installation of tube wells, etc. Banks provide loans under the Supervised Credit Scheme and
outside the Supervised Credit Scheme.
(3) Cooperatives. The cooperatives are oldest institutional sources of farm credit in Pakistan. The
performance of the cooperatives in the spread and utilization of credit to the small farmers is not
satisfactory. The loans are mostly utilized by big farmers who have got their pocket societies
registered with the Cooperative Department. Share of cooperative banks in the supply of total
agricultural credit was 5% in the year 2006-07.
(4) Taccavi Loans. Taccavi loans are handled by the Provincial Revenue Department. Necessary
founds are allocated for different areas each year in the provincial budgets. The Taccavi loans are
primarily given to the farmers for meeting emergencies such as flood, earthquake, famine, etc. The
farmers take these advances in the spirit of gift or relief given in calamity and are not serious in
repaying them. So this source is now occupying insignificant position in the disbursement of overall
credit to the farmers. Agricultural loans are being made available to the farmers at the farmers at
low mark up.
Is the agricultural credit adequate?
The Government of Pakistan fully realizes the increasing credit requirements of the farming
community for the purchase of fertilizers, pesticides and mechanization. The ZTBL Commercial
Banks, Cooperatives are making every effort to provide credit to the farmers particularly small
farmers for the purchase of inputs like seeds, fertilizers, machinery fisheries etc in time. The
campaign for one window operation for preceding short term production loans is quite successful.
However, the requirement of the landless and small farmers for loans is so large that it cannot be
fully met.
PROBLEMS OF RURAL CREDIT AND MEASURES ADOPTED TO SOLVE THEM
According to Agricultural Census 1990, there are 5.1 million farms in the country and 93% of these
are small farms (up to 10 hectares account for 60% of total cultivated area). The large farms are only
7% of total farms and account for 40% of total cultivated area. The loan portfolio of the various
credit institutions and industry. The shortage of rural credit both in quantitative and qualitative
terms continues to be a limiting factor in the modernization and growth of production in agriculture.
The major problems which are being met by the farmers in the receipts of rural credit from the
institutional sources are summarized below:
1. Less Flow of credit to small farmers. There are millions of small farmers throughout the country.
In spite of expansion of institutional rural credit, the gain has reached more to the big landlords. It is
therefore, an urgent need that the credit should reach the small farmers who are the backbone of
agricultural industry.
2. Complicated procedure for advancing loans. At present, the procedure for advancing loans by
institutional sources is quite complicated. The loans are advanced to the farmers on the basis of pass
books which contain the details of land owned by the farmers. The procedure is quite complicated.
3. Delay in the disbursement of credit. The procedure involved for advancing loans to the farmers is
cumbersome. Who-so-ever succeeds in completing the documents is entitled to receive loans. It has
been observed that the disbursement of credit is farmers are after it has been approved. It is a
serious problem which the farmers are facing these days. One window operation started by ADBP
has solved this problem to some extent.
4. High interest rate. The interest charged by the various institutions on farm credit is high. The low
income farmers cannot bear it. As regards the interest-free loans, they are not reaching the small
deserving farmers. These loans are being misused on large scale through proxy loaning, family
loaning and paper loaning.