Unclear land title a drag on farm credit

Post Source: DAWN Economic and Business Review

THE disbursement of agricultural credit in Sindh has not improved much despite numerous efforts including one-window operations and mobile credit service, according to a mid-year review. The figures of the Agricultural Credit Department, State Bank of Pakistan, show that farm credit in the province, during July-December 2009-2010 has increased by six per cent over the same period last year. The overall amount of credit is Rs11.8 billion out of Rs36 billion target set by the SBP.

The farm credit inflows into the province in the half of last year was at Rs9 billion (26 per cent) against the target Rs35 billion.

Of the total countrywide target credit of Rs260 billion, 11.11 per cent has been earmarked for Sindh, 86 per cent for Punjab, 2.61 per cent for NWFP and 0.28 per cent for Balochistan respectively.

Growers blame low utilisation of farm credit in Sindh to non-cooperation of revenue officials, commercial banks and rampant corruption in the Zarai Tarqiati Bank and hassles in loan processing.

A large number of growers’ land records and passbooks are not updated. It is another major problem for growers seeking agriculture credit facility.

“The agri credit off-take is hindered because of different problems in the growers’ land records. And most of the subsistence farmers fail to get credit because of one or the other problem in their land records”, said Nawaz Memon, general secretary of Sindh Abadgar Board (SAB).

Lack of computerisation of land records is a great hurdle in maximising agri credit in the province, believes Abdul Majeed Nizamani, SAB president.

“A few years back the provincial government had decided to computerise land records, which were set ablaze allegedly by en, at that time lying in the record room of the provincial revenue department building adjacent to the Sindh High Court.

But, not a single district’s land record has been computerised so far”, lamented Abdul Majeed Nizamani.

He also recalled that some times ago the Sindh High Court had ordered that no transition should be carried out by any bank until the land record was computerised within three months’ time. But, the provincial revenue department has failed to deliver, he added.

“Growers are worried that the provincial government is slack in this regard. It should fight the case in the court so that the growers do not suffer,” he remarked.

Farmers in Sindh also complain that commercial banks are reluctant to sanction loans to small growers. And, if they approve small loans, these carry in some cases 25-30 per cent mark-up.

Amin Memon, chairman Lar Abadgar Forum, says once the loan is sanctioned by commercial banks, particularly ZTBL and NBP, the bank officials compel the growers to pay 25-35 per cent mark-up, which is deducted before the loan amount is deposited in grower’s bank account.

He said only eight per cent mark-up is fixed for farm loans.

Only 75-80 per cent amount of the total sanctioned loan is deposited in the borrower’s bank account, he explained and added in addition, commercial banks take more than two months to process the loan application which delays sowing, resulting in low crop yield.

Amin Memon underlined the need for simplification of the loan application process, which is quite cumbersome and intricate, because of which, growers avoid to apply for agri loan. They go to the local traders for borrowing money despite the high mark-up rate because it is easier and quickly available to growers, he pointed out.

Muhammad Ashraf Khan, director Agricultural Credit Department of SBP, believes improved role of the provincial revenue department and computerisation of land records would help maximise disbursement of the agri credit in Sindh.

Ashraf Khan observed that the agri credits in Punjab, NWFP and Balochistan have always showed a positive performance while in Sindh it remains sluggish due a number of problems.

He agreed that dismal revenue record keeping and non-computerisation of land records are among major stumbling blocks to the transparent and unhampered bank borrowing by growers, particularly the smaller ones.

However, Ashraf Khan said, it is heartening that the provincial revenue department has recently expedited process of computerising the land records.

“We have asked the commercial and specialised banks to reduce the processing time for agri loan to enable growers to start timely cultivation ” he told this scribe.

Ashraf remarked Sindh has fertile land and its agricultural and livestock potential need to be tapped for economic growth of the province. He suggested that the provincial government should focus on exploiting the potential and offer incentives to the growers to bring as much land under cultivation as possible.

An official in ZTBL says non-updated passbooks and errors in agri land records are serious problems for poor disbursement of agri credit.

He said even if 50 per cent records of growers are updated farm credit disbursement in the province would improve

“Sorting out of these issues without further delay by the revenue department officials in towns and districts of the province would of course prove helpful in maximising farm credit,” he believed.

Hasan Naqvi, project director for Land Management and Revenue Administration Information System (LMRAIS), said computerisation of the land records, lying dormant during last one and a half year, has been speeded up. Sindh Chief Minister Syed Qaim Ali Shah is taking interest in the growers.

He further told to this scribe that the provincial revenue department has planned to establish 23 revenue centres at all district headquarters on the pattern of Nadra centres by the end of this year to speedily computerise the land records.

“More or less 10 million land records all over Sindh are going to be computerised now and it is already in process,” Hasan Naqvi informed.

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