AGRICULTURAL CREDIT MARKETS IN NORTHWEST PAKISTAN: IMPLICATIONS FOR THE DEVELOPMENT POLICY

This study was carried out in 2005-06 in district Peshawar, Khyber Pakhtunkhwa with the aim to investigate agricultural and non-agricultural credit markets. The study found that farmers in the area benefited from both agricultural and non-agricultural credit markets. However, access to formal credit institutions was not possible for all farmers. Despite farmers’ inability to furnish land documents as collateral, a number of other difficulties, such as cumbersome loaning procedure and rigid repayment conditions, were noted as main barriers to attaining credit from the formal institutions. The potential expansion of social polarization in the wake of unfair access to agricultural credit was thereby curtailed by the non-agricultural credit markets. The study also depicted that agricultural credit was mainly utilized at farm and non-agricultural credit was used off-farm for social festivities. It is concluded that there is a need to reformulate the development policy. The new policy must take into account all possible accessibility measures to the agricultural credit markets. At the same time, it should institutionalize non-agricultural credit markets to reduce social polarity so that all prospective farmers take benefits from both of the credit sources.