Financial Daily from THE HINDU group of publications
Friday, Feb 06, 2004
Financial Daily from THE HINDU group of publications Friday, Feb 06, 2004 |
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Money & Banking
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Farm credit Agri-Biz & Commodities - Farm credit Banks urged to lend more to farm sector Our Bureau
Hyderabad , Feb. 5 WHY are banks hesitant to increase credit to the agriculture sector and the small and medium enterprises (SMEs)? When the Reserve Bank of India (RBI) posed this question to commercial banks, the response was the non-performing assets (NPAs) in agriculture are high and risks more in lending. However, a study has found that the NPAs in agriculture are not as high as those in SMEs. The difference between NPAs in agriculture and non-priority sectors was also not large. Giving these details, the Deputy Governor of the Reserve Bank of India (RBI), Dr Rakesh Mohan, has asked banks to factor in these issues and improve their lending to this vital sector. If the economy has to grow at 8 per cent, agriculture growth needs to be 4-5 per cent and not the 2-3 per cent now. Use of data mining and the marriage of telecom revolution with the information technology tools to better understand agriculture and the risks involved would be helpful for banks to improve their credit, he said. Commercial and co-operative banks also need to re-orient themselves to properly support through adequate credit to the changing face of Indian agriculture, which includes diversification in crops, value addition, and post-harvest infrastructure, Dr Rakesh Mohan said in his Presidential address to the XVII annual conference on agricultural marketing, organised by the Indian Society of Agricultural Marketing (ISAM), here today. Traditionally, the banking sector is better geared to finance cereals. However, with the consumption patterns showing a shift from cereals to a whole range of other agriculture products and the change in the way production and marketing of these goods is taking place, banks need to relook their strategies, the Deputy Governor said. In his Chairman remarks, Prof R. Radhakrishna, President of ISAM, said the Government was moving towards restructuring of agriculture marketing, which included contract farming, restructure of local mandies, a redressal system to settle contract farming disputes. The Minister for Agriculture has sought the views of various States on the matter.
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