EFFECTIVENESS OF MICRO-CREDIT LOANS PROVIDED BY ZARAI TARAQIATI BANK LIMITED UNDER AWAMI ZARAI SCHEME TO THE FARMERS OF FAISALABAD, PAKISTAN

Pakistan agriculture credit system consists of formal and informal sources of credit supply. The formal credit sources involve financial organizations like Zarai Taraqiati Bank limited (ZTBL) formerly known as Agricultural Development Bank of Pakistan (ADBP), commercial banks and cooperative societies. ZTBL is considered one of the biggest financial organizations that has contributed in the rural sector of the country. The bank is serving as the prime financial institution. It caters the credit needs of farmers for the development and upgradation of agriculture as well as promotion of small-house industries in the rural areas. ZTBL provides loans to mostly small farmers of 12 acres of land. The present study was designed to explore the effectiveness of these micro-credit loans. Multistage cluster sampling technique was used to select 120 respondents from 2 towns of tehsil Faisalabad. Questionnaire was designed in English and then translated into local language to collect maximum information. SPSS was applied to analyze the data and interpreted in the form of frequencies and percentages. It is found that agricultural production increased by loaning and loans directly affected on the farmer life. Most of the farmers of about 36.7% used loan's amount to purchase the agriculture utilities and some used this amount for other purposes. The study also revealed that loanees are mostly from the young age group and educated. It was perceived that rare filed visits of credit officers and difficult documentation during loan process were main hindrances for farmers. Some of the farmers have perception as ‘it is not good to get loan’ but majority is in the favor. It is concluded that loan cause positive effective on the farmer’s life.