Home Business Pakistan Banking Sector witnesses growth on Digital front and Agriculture

Pakistan Banking Sector witnesses growth on Digital front and Agriculture

Banking Sector
  • 67
    Shares

News Analysis |

The State Bank of Pakistan (SBP) in its ‘Payment Systems Review’ for the financial year 2017-2018 has provided a statistical snapshot of the payment systems in the country, showing growth in various traditional and modern payment systems.

During the financial year 2018, the country’s core payment systems infrastructure remained operationally resilient. All the channels of payment systems showed significant growth compared to the previous year. The large-value payment system i.e. Pakistan Real Time Interbank Settlement Mechanism (PRISM) processed 1.7 million transactions amounting Rs361 trillion.

There were 1,094 locally registered e-Commerce Merchants having their merchant accounts in 8 banks as of the end of June 2018 showing limited boarding of e-Commerce merchants in the country

These transactions showed significant growth of 54.5 percent and 29.2 percent in both volume and value of transactions compared to the previous financial year. In these transactions, the transactions with regards to third-party customers’ transfers have the highest share of 1.3 million transactions (i.e. 79 percent of the overall recorded transactions) whereas Government securities settlement transactions have the highest share of Rs256 trillion in a value of transactions.

There were 1,094 locally registered e-Commerce Merchants having their merchant accounts in 8 banks as of the end of June 2018 showing limited boarding of e-Commerce merchants in the country. Consumers carried out 3.4 million online transactions of worth Rs18.7 billion on these locally registered e-Commerce Merchants during the year FY18.

Read more: World Bank grants $300 million to improve Punjab’s agriculture

These transactions showed a significant YoY growth of 183.3 percent and 98.9 percent compared to the previous year. In addition to the above, domestically issued Debit, Credit and Pre-paid cards processed 6.8 million transactions of Rs. 39.7 billion on local and International e-Commerce merchants. In these e-Commerce transactions, Credit Cards has the highest share both in volume and value of transactions.

While no specific information has been provided on the number of users of these cards, the number of transactions processed through these cards has increased by 37.3 percent with total transactions, as on June 2018, having been reported at 34.4 million, at a value of Rs201.5 billion during the fiscal year 2018.

Agriculture loans in 2017/18 were 38.1 percent higher than the previous year’s disbursements of Rs704.5 billion, the State Bank of Pakistan (SBP)

Having grown at a pace of 21.8 percent and 23.4 percent in the volume and value of transactions respectively, during the year under review, debit cards processed a total of 441.1 million transactions worth Rs5.1 trillion, far greater than the size and value of transactions conducted using credit cards.

However, the bulk of this usage has been on transactions concerning ATM withdrawals whereas the share of transactions with respect to Point of Sale usage has been merely 8.6 percent in volume and 2.9 percent in the value of transactions.

Credit cards, on the other hand, has been the predominant medium for Point of Sale usage, with the 87.2 percent of the total volume of credit card transactions being made on Point of Sale payments and 10.2 percent in e-Commerce transactions.

Read more: Taliban gunmen open fire at Directorate General Agriculture Peshawar

Meanwhile, Banks disbursed agriculture credit of Rs972.6 billion during the last fiscal year of 2017/18, falling short of Rs1 trillion target set by the Agriculture Credit Advisory Committee (ACAC), the central bank said on Thursday.

Agriculture loans in 2017/18 were 38.1 percent higher than the previous year’s disbursements of Rs704.5 billion, the State Bank of Pakistan (SBP) said. Further, the agriculture outstanding portfolio increased to Rs469.4 billion by June-end 2018 registering a growth of 15.7 percent compared with last year’s position of Rs405.8 billion. Similarly, the agricultural credit outreach increased to 3.72 million farmers till June-end 2018, from 3.27 million farmers reached last year, recording growth of 13.8 percent.

Banks failed to achieve the FY18 agriculture credit target, however, the SBP said that the achievement of agri credit disbursement was a challenging task in the backdrop of various real side challenges like; water shortage, low production of maize and wheat, price volatility of agri produce and a high cost of production.

Fifteen domestic private banks as a group achieved 92.4 percent against the target of Rs200 billion, and five Islamic banks achieved 82 percent of their total target of Rs20 billion

“The SBP made concerted efforts for achieving the agri credit disbursement target and implementing various budgetary initiatives set by the government,” the SBP said in a statement. “These efforts included; provision of enabling a regulatory environment for agri lending institutions, sensitizing banks to adopt agri financing as a viable business proposition, exploring new avenues of financing; value chain financing, digitalization of credit, warehouse receipt financing, and implementation of credit guarantee scheme for small and marginalized farmers etc.”

In addition, SBP has taken various initiatives for promoting agri credit, including allocation of regional targets and continuous follow up with banks for the achievement of the targets. Further, farmer’s awareness programmes at the grassroots level have also helped in improving agri credit disbursement in underserved areas.

Read more: Telenor partners with Inbox Technologies to improve agriculture

The analysis of agri credit disbursement during 2017/18 reveals that five major banks collectively disbursed agri loans of Rs523.9 billion or 101.5 percent of their annual target of Rs516 billion which is higher by 52.9 percent from Rs342.6 billion disbursed during the previous year.

Under specialized banks category, Zarai Taraqiati Bank Limited (ZTBL) disbursed Rs83.2 billion or 66.6 percent of its annual target of Rs125 billion, while Punjab Provincial Cooperative Bank (PPCBL) disbursed Rs10.7 billion by achieving 71.5 percent against its target of Rs15 billion last year.

Read more: Plight of rice exporters: Pakistan needs a new bank that deals…

Fifteen domestic private banks as a group achieved 92.4 percent against the target of Rs200 billion, and five Islamic banks achieved 82 percent of their total target of Rs20 billion. Further, the performance of microfinance banks and microfinance institutions remained encouraging. Collectively, these institutions surpassed their annual targets by disbursing Rs124.8 billion and 28.7 billion respectively to small farmers in 2017/18.


  • 67
    Shares

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.