The Hindu Business Line : PSBs to make good agri lending by co-op banks

The Union Finance Minister, Mr P. Chidambaram, on Saturday asked the public sector banks in Tamil Nadu to make good any shortfall in agricultural lending by Co-operative banks in the State.

"You tell me what the gap is, we will take over," Mr Chidambaram told the State Industries Secretary, Mr K. Gnanadesikan, at a Special State Level Bankers' Committee meeting here.

In Tamil Nadu, the Convenor of the SLBC is Indian Overseas Bank.

Lending targets

For the current year, banks have fixed for themselves a target of Rs 15,388 crore for agricultural lending in Tamil Nadu.

The target is the aggregate of the district-wise figures furnished by the various District Consultative Committees of which banks in the respective district and the District Collector are members.

In 2006-07, it was planned that scheduled commercial banks would lend Rs 11,180 crore to agriculture, Regional Rural Banks Rs 786 crore and the various Co-operative banks Rs 3,396 crore.

While commercial banks and RRBs perceive no problems in meeting their targets, the State government (which controls the co-operative banks) felt that the co-operative banks might not be in a position to meet theirs.

It was mentioned at the Special SLBC meeting that the shortfall might be anywhere between Rs 500 and Rs 750 crore.

Mr Chidambaram gave a commitment on behalf of the commercial banks that the banks would make good any gap.

Good year for agriculture

Later, addressing a press conference, Mr Chidambaram said that the reservoirs in Tamil Nadu were full and 2006-07 would be a good year for agriculture for the State.

At the Special SLBC meeting, a representative of the Tamil Nadu Government complained to the Finance Minister about the pile-up of loan applications with banks, applications that were made under the National Scheme for Liberation and Rehabilitation of Scavengers and Land Purchase Scheme of Tamilnadu Adi Dravidar Housing and Development Corporation.

Representatives of banks responded saying that there were issues of viability of the land purchase scheme — sometimes the land bought under the scheme was not seen to be cultivable.

"I am very disappointed. This is a bad reflection on the banking system," Mr Chidambaram said.

It was later decided that banks would quickly clear those loan applications where the cultivability of the land was not in question.

More Stories on : Farm credit | Co-operatives | Public Sector Banks

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