The Hindu Business Line : RBI panel to study agricultural lending

RESERVE Bank of India has constituted a committee on the flow of credit to agriculture, which will asses the progress made in implementation of the recommendations of the Expert Committee on Rural Credit (Vyas Committee) appointed by Nabard in August 2000.

The committee is required to submit its report by April 2004.

Under the Chairmanship of Prof V.S. Vyas, the committee will suggest measures to reduce the rate of interest on agriculture credit given by commercial, cooperative and regional rural banks (RRBs).

It will also examine the role of Nabard as the apex institution for providing and regulating credit for the promotion and development of agriculture and the role of RRBs in purveying agricultural credit and suggest measures for improving the same without sacrificing overall viability considerations, said an RBI press release.

The working group also aims to study the role and effectiveness of the Rural Infrastructure Development Fund mechanism and suggest ways to improve the same, or to suggest alternatives, with a view to increasing direct agriculture lending. It will try to identify the impediments in the flow of credit to the disadvantaged sections such as small and marginal farmers, tenant farmers, oral lessees and landless labourers and suggest measures to be taken by banks for providing financial assistance to them, the release said.

The group will study the role of micro finance in poverty alleviation and adoption of the Self Help Group approach in extending banks' outreach to the disadvantaged sectors and examine the need to regulate micro finance institutions and to suggest appropriate regulatory model.

It will also examine the norms relating to NPAs in cases of crop failure where seasonality and uncertainty are not captured, said the release.

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