The Hindu Business Line : ICICI Bank sees farm credit at Rs 7,000 cr

The bank expects to disburse Rs 7,000 crore towards agricultural credit by the end of fiscal 2004-05 as compared with Rs 4,000 crore disbursed in the previous fiscal.

Innovative projects in agriculture should be financed by venture capital and not debt capital, said Mr K.V. Kamath, Managing Director and CEO, ICICI Bank, speaking at conference on business opportunities in agriculture organised by CII.

Financing of agriculture projects should not be driven by regulatory obligations, as it is a profitable proposition.

"The bank is working out options of venture capital and these innovative projects should be fashioned in such a way as to convince venture capital companies," he added.

Mr Kamath also said that lending to agricultural projects could give a reasonable return. In order to study the credit delivery system, a dedicated agro group has been set up by the bank.

"In order to reduce the costs of agriculture lending we should trim down the number of intermediaries and increase agriculture insurance products. Risks of agri lending and increased intermediation costs are pushing up the costs in this field", he added.

"Packaging the credit along with insurance products substantially decreases the risks associated with agricultural lending," said Mr Kamath.

Answering a query relating to the bank's entry in watershed management, he said that the bank immediately had no plans to enter the field but it was open to all infrastructure projects.

"We will look at every business, evaluate, assess and be a partner in agri-business," said Mr Kamath.

He also added that ICICI Bank, in its second year of operations in the agri-sector, was the second largest lender in the sector and had also achieved its profitability targets of 20 per cent on the equity deployed.

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