The Hindu Business Line : Banks have to offer farm loans at 7-8 pc: Pawar

THE Union Agriculture Minister, Mr Sharad Pawar, on Friday said Indian agriculture was facing a serious crisis and urged the banking community to bring down interest rates for farm credit to 7-8 per cent. "It is a funny situation when customers are offered loans at interest rates of 7 per cent to buy Maruti cars and the agricultural community, which has given us food security, has to pay 12-14 per cent for credit," Mr Pawar said.

"Banks will have to bring down their lending rates to agriculture in two years," Mr Pawar said.

Speaking at the inauguration of Bank of India's Information Technology Training Centre in Pune, Mr Pawar said a study by a research institute in Hyderabad found 90 per cent of the cases of farmers' suicides in Andhra Pradesh was found linked to non-availability of agricultural credit.

Mr Pawar said, "Only 35 per cent of farmers have access to credit and we have to expand this network". The BoI Chairman, Mr M. Balachandran, said the banking industry would have to become more sensitive to the credit requirements of the agricultural community and that of the self-employed in the SME sector.

"Large corporates have other avenues of raising funds for their projects, but farmers have nowhere else to go for their credit requirements," Mr Balachandran said.

"Lending to agriculture is profitable business for banks and has almost the same risks as in lending to other sectors," he added.

Mr Balachandran said that in addition to reducing the rate of interest, what was also important was the timely delivery and hassle-free credit to farmers and also empowering them by technical and technological inputs.

"By the end of this year, the bank will have set up 101 model villages where progressive farmers will develop farms demonstrating best practices for maximum high quality produce," he said, adding the bank was in talks with corporates to involve themselves in these projects.

In addition, the bank was also setting up kiosks at these villages and various branches where farmers can monitor prevailing prices of various produce in markets, he said.

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