GROUP

MEMBERS
SYED ALI HUSSNAIN
(083705043)

MALIK SAIF NAUMAN

(083705113)

MUHAMMAD ALI RAZA

(094005087)
 FINAL PROJECT

TOPIC

AGRICULTURE CREDIT
 Introduction

F A R M E RS , L A R GE A N D S M A L L , A N D T H E
N O N - F A R M P O P U L A T I O N I N R U RA L
A R E A S A L L S U F FE R F R O M T H E L I Q U I D I T Y
C O N S T RA I N T . C R E D I T I S N EE D E D T O
A C Q U I RE C O M M A N D O VE R T H E U S E O F
WORKING CAPITAL, FIXED CAPITAL, AND
C O N S U M P T IO N GO O D S .
 Purpose of agriculture credit

Banks lend to farmers for a variety of purposes.

(1) short-term credit to cover operating
expenses.
(2) intermediate credit for investment in farm
equipment and real estate improvements.
 Purpose of agriculture credit(cont)

(3) long-term credit for acquisition of farm real

estate and construction financing.
(4) debt repayment and refinancing.

Commercial banks are the largest source of

agricultural credit,
 Current situation of agricultural credit in Pakistan
 

From mid seventies and onward all the state-owned

banks, the Agriculture Development Bank,
cooperative banks embarked on financing the
agriculture sector in a big way with quite a number
of credit schemes both for farming and non-
farming activities.
Current situation of agricultural credit in
Pakistan(cont)

That also failed to boost up rural economy to the

desired level, due to the absence of promotional
role of banks and financial institutions in this
regard.
Introduction of the “supervised agriculture credit”
scheme in early eighties was a step in the right
direction, but due to the failure of banks to
implement the same in letter and spirit, it remained
ineffective in improving the growth rate of the
agriculture sector.
 Agricultural credit and related matters

In order to contribute to an improvement in

economic and social conditions, agricultural credit
policy needs to be designed
(1) To provide needed credit at reasonable
terms to farmers, forest owners, and fishermen,
and to private, cooperative, or governmental
undertakings servicing agriculture.
Agricultural credit and related matters(cont)

(2) To discourage uneconomic borrowing, and

particularly borrowing for wasteful
purposes;
(3) To encourage orderly debt repayment.
(4) To advise and guide farmers as to the
effective use of credit.
 Recommendations

In view of the importance of effective credit for

agricultural development, and in order to assist
countries seeking to improve their agricultural
credit systems, there should be established a
reporting and consulting service on agricultural
credit. The tasks of this service should comprise
 Recommendations

(1) The development, on the basis of data received, of

a current information service to Member
governments and the periodic publication of data
that are of general interest.
(2)  Comparative studies of problems of importance for
the improvement of agricultural credit facilities in
Member countries.