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Agricultural Development Bank of Pakistan.

Agricultural Development Bank of Pakistan

The Annual Report exhibits the activities and performance of the Agricultural Development Bank of Pakistan, which occupies a unique position among the financial institutions of the country. It serves the biggest economic sector of Pakistan with praise worthy initiative and technological services. As compared to previous Reports, the Report for the year 1989-90 is relatively brief and economy has been displayed in the use of material, paper and services. Despite that it is very useful for the students of Pakistan economics, agricultural economics, public finance and banking and credit, public and business management and labour economics. It is available from the Head Office of the Agricultural Development Bank of Pakistan, Islamabad.

In fiscal year 1989-90, the Annual Report which is under review, the Agricultural Development Bank of Pakistan completed 29 years of its existence. The Bank is one of the four Government sponsored institutions, which provide credit for financing of agricultural current and development activities. Other three institutions are Government itself which provides credit to farmers under taccavi in case of calamities, the Federal Bank for Cooperatives and the commercial banks. The Agricultural Development Bank of Pakistan is now the most important agricultural credit providing institution and in 1989-90, she accounted for more than 61.6 per cent of the total institutional credit. During the last five years, the share of ADBP has been increasing regularly in the fluctuating supplies of total agricultural credit as shown in the following table.

ADBP Share in Total Institutional Agricultural Credit 1985-86 to 1989-90
 (Rs. in Million)
 Total %Share
Years ADBP Credit of ADBP


1985-86 5,307.87 13,147.45 40.4 1986-87 6,031.15 15,809.30 38.1 1987-88 7,717.16 15,893.04 48.6 1988-89 8,667.52 14,121.58 61.4 1989-90 9,389.86 15,242.89 61.6

The ADBP does not concentrate much to meet the current production needs of the farmer for agricultural credit. It promotes developmental efforts and provides mostly long-term and medium-term credit. Besides, in recent years, the Bank has been giving long-term credit to finance the establishment of agro-based industries and agro-allied services, such as provision of agricultural inputs and repair services. Up to 30 June 1990, loan portfolio comprised 76.9 per cent of long and medium term development credit, 9.1 per cent of short-term production credit and 14 per cent of agribusiness credit as shown below:

ADBP Loan Portfolio Category-wise As of June 30, 1990
 (Rs. in Million)
 Amount (%)
Category Outstanding Share
General Credit 29,187.584 86.0


Development Credit (Medium & Long-Term 26,086.359 76.9

Production Credit
(Short-Term) 3,101.225 9.1
Agribusiness Credit 4,770.270 14.0
Total: 33,957.854 100.0


ADBP Term-wise Composition of Loans Disbursed in 1989-90
 (Rs. in Million)
 General Credit Project Loans Total
 No. of Amount No. of Amount
 Loan Disbursed Loan Disbursed No. of
Term Cases Cases Cases Amount
Short Term 50,682 2,228.135 39 133.552 50,721 2361.687
Medium Term 34,514 1,408.393 13 29.564 34,527 1437.959
Long Term 31,319 5,005.149 94 585.068 31,413 5590.217
TOTAL 116,515 6,641.677 146 748.184 116,661 9389.861


In 1989-90, there was some improvement in the supply of short-term loans as shown in the table:

During 1989-90, over 74 per cent of general credit were development loans and less than 26 per cent production loans. Over 40 per cent of all general credit was consumed by purchase of tractors, over 10 per cent by establishment of dairy farms, 6.8 per cent by purchase of farm equipment, 5.7 per cent by tubewells, 3 per cent by poultry farming, 2.5 per cent by livestock development and about 6 per cent by other developmental activities such as farm transportation, fisheries, godowns/cold storage, draught animals and others.

Major portion of general credit extended for production purposes went to fertilizers (10.2 per cent), pesticides (8.3 per cent), improved seeds (4.1 per cent), and over 3 per cent used as working capital for poultry industry, working capital for dairy industry, working capital for fisheries industry and other production activities.

Above brief details of the use of the agricultural credit by the Agricultural Development Bank of Pakistan shows the technological involvement of the ADBP in agricultural sector and the introduction of new technologies there. Two of the major activities of the Bank are briefly given below.

Gujranwala Project

The project was designed to increase agricultural production and to ameliorate the socio-economic conditions of small farmers and the landless rural poor including women in Gujranwala District by providing credit facilities for establishment of small dairy and cottage industries. Under the project, loans are advanced for milk production, sheep, goat, poultry enterprises, and home-based cottage industries such as carpet-weaving, dress making tailoring, knitting farm implements manufacturing, coarse cloth making, mats, pottery, and small mechanical workshops.

National Oilseed Development Project

Shortage of oilseeds and edible oils is one of the most serious socio-economic problems of Pakistan. Because of it, the country's finances, foreign exchanges position and prices are under pressure. In 1990-91 budget estimates of subsidy for distribution of edible oil are placed at Rs. 1.34 billion. In 1989-90, 962,006 metric tons of edible oils valued at Rs. 8.262 billion were imported. The ADBP is trying to motivate the farmers to increase the production of oilseeds. The National Oilseed Development Project was approved in 1989 which is being financed by the International Bank for Reconstruction and Development and the International Development Association by advancing loans of $31.4 million and $14.5 million respectively.

The ADBP being one of the executing agencies of the project is providing credit facilities to the oilseed growers for agricultural inputs, including improved seeds, fertilizers, pesticides and hired labour charges on normal terms. Technical assistance for better production of oilseeds is also being provided to the farmers by the technical experts of the Bank.

Agribusiness

Promotion of agribusiness in rural areas is an important aspect of rural and agricultural development. The ADBP is concentrating most on promoting dairy farming and breeding of milch animals. Up to the end of June 1990, 24 per cent of loans, totalling over Rs. 4770 million, were advanced for dairy farming and breeding of milch animals. Almost 13 per cent of loans were used for promotion of commercial cultivation of lucrative crops. Production and processing of fruits and vegetables was another important agro-based industry and absorbed 9.4 per cent of loans. About 6.7 per cent of agro-business loans were used for increasing production of edible oils and 4.1 per cent for the processing of dairy products. Feed mills absorbed 3.7 per cent of loans and process of crop residue 3.4 per cent.

Other activities financed out of agribusiness loans were livestock production and processing, poultry production and processing, agro-based services, manufacture of mechanical agricultural implements, fisheries production and processing, packing material for liquids storage and marketing, and several other activities.

Administration

The ADBP is expanding its activities quite rapidly. Total assets of the Bank increased from Rs. 32.527 billion at the end of June 1989 to Rs. 39.328 billion at the end of June, 1990. During the same period, the number of regions increased from 42 to 47 and number of Bank branches from 27 to 322. In 1989-90, coverage of the Bank was 41,769 villages as compared to 41,115 villages in 1988-89. To implement Bank's loan activities successfully the number of Mobile Credit Officers increased from 1349 in 1988-89 to 1487 in 1989-90 and total number of staf from 7,688 to 8,649.

For the present, the Agricultural Development Bank of Pakistan depends for resources on the Central Bank and international financial agencies. In 1989-90, the Bank took loans totalling Rs. 6,232.5 million from the State Bank of Pakistan and repaid Rs. 4819.233 million. Total outstanding loans from the State Bank of Pakistan stood at Rs. 19,475.961 million at the end of June 1990. During the year 1989-90, loans totalling Rs. 912.852 million were received from international financial institutions. Profit and loss account of the Bank appears to be sound and in 1989-90, net profit was higher than the preceding year as shown below:

ADBP Profit and Loss Position 1988-89 and 1989-90
 (Rs. in million)
 1988-89 1989-90
Income 2141 2645
Expenditure 1840 2301
Net Profit 301 344


CONCLUSION

The Annual Report exhibits the activities and performance of the Agricultural Development Bank of Pakistan, which occupies a unique position among the financial institutions of the country. It serves the biggest economic sector of Pakistan with praise worthy initiative and technological services. As compared to previous Reports, the Report for the year 1989-90 is relatively brief and economy has been displayed in the use of material, paper and services. Despite that it is very useful for the students of Pakistan economics, agricultural economics, public finance and banking and credit, public and business management and labour economics. It is available from the Head Office of the Agricultural Development Bank of Pakistan, Islamabad. [Tabular Data Omitted]
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Author:Khan, Abdul Majiod
Publication:Economic Review
Date:Feb 1, 1991
Words:1538
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