The Hindu Business Line : Banks finalising schemes to implement farm package

Ms Ranjana Kumar, Chairperson, Nabard, Mr V. Leeladhar, Chairman, Indian Banks' Association, and Mr H.N. Sinor, Chief Executive, IBA, after a meeting of bankers on farm credit in Mumbai on Tuesday. - Shashi Ashiwal

Mumbai , June 22

COMMERCIAL banks have agreed to meet the farm lending target set by the Finance Minister. They are in the process of finalising specific schemes to help distressed farmers.

These schemes will be announced in a week, said Mr V. Leeladhar, Chairman, Indian Banks' Association (IBA).

CMDs of major public sector banks who met here on Tuesday decided to meet the 30 per cent growth target of Rs 57,000 crore to the farm sector this year as against disbursals of Rs 43,000 crore in the previous year.

The Indian Banks' Association along with the National Bank for Agriculture and Rural Development, are in the process of working out schemes which range from restructuring bad debts in the farm sector to expanding credit flow to a larger segment of farmers, as proposed by the Finance Ministry recently, said Mr Leeladhar addressing press persons here after the meeting.

``Over the past few years, agriculture credit has become a commercial business proposition for banks. The recoveries in this area have been over 70 per cent. Rural credit is an important segment of the economy and careful funding with appropriate risk management measures will ensure that the profitability of banks will not be affected,'' said Mr Leeladhar. He was responding to a query on the impact of the proposed farm lending to banks' profitability. Banks stocks took a beating on Monday over fears that they will be subject to direct lending.

The agri-funding will be based more on investment credit and not just on crop loans. Banks will be looking to finance plantations, horticulture, fisheries, organic farming, livestock, watershed development, village pond farming etc, he said.

Speaking on the occasion, Ms Ranjana Kumar, Chairperson, Nabard, said banks would be looking for a 30 per cent growth in agricultural credit this year. Special schemes were also being worked out for drought-prone areas, she said.

``We are also looking at simplification of documentations in agriculture for loans of up to Rs one lakh to provide hassle-free credit to farmers,'' she added.

Ms Kumar today met with the chiefs of all public sector banks to consult them on the proposed schemes. Similar meetings with co-operative banks, regional rural banks and private banks were on the cards, she said.

An expansion in the scope of use of kisan credit cards for ancillary and other allied farm activities is also being proposed. Currently, the kisan credit cards may be used for obtaining crop loans.