The Hindu Business Line : SBI targeting Rs 40,000-cr lending to farm sector

The blueprint
To expand network, hire marketing officers
In talks with ITC, Drishti and Reliance for partnering as business correspondents
To aggressively market personal loan products

Priya Nair

Mumbai, Aug. 31 The largest bank in the country, State Bank of India, is targeting agricultural advances of over Rs 40,000 crore by the end of March 2008 against Rs 34,993 crore as on March 2007. This would amount to a growth of over 14 per cent.

Mr Anup Banerji, Deputy Managing Director, Rural Business, said, “We are looking at agriculture advances somewhere between Rs 40,000 and Rs 45,000 crore.”

This would amount to a three-fold increase in the bank’s agri portfolio from March 2004, when it set up the separate agri business unit, Mr Banerji said. The share of the agri portfolio to the bank’s total business has increased from 12 per cent in March 2004, to 15 per cent as on June 2007.

Speaking to Business Line, Mr Banerji said, “There is lot of competition in the rural sector. But even with our wide network we find it difficult to service the business,” he said.

SBI has 6,400 branches in rural and semi-urban areas, which amounts to about 70 per cent of the bank’s total network. Apart from opening new rural branches and improving the staff strength in these branches, the bank is also looking to leverage its marketing platform.

Over the last three years, the bank has been hiring agriculture graduates and post-graduates as marketing officers. They source, apprise and prepare proposals for loans and products.

“We have about 800 of new recruits whom we have formed into teams and they are sourcing products,” Mr Banerji said.

The bank is also planning to appoint about 20,000 business correspondents by the end of this year. Pilot projects are under way in places such as Baramati in Maharashtra, Andhra Pradesh, Mizoram and Chamouli in Uttarakhand, among others.

“This is a macro target. The actual number will depend on the outlets the correspondent has. If the correspondent has a wide network then the service points will be many,” Mr Banerji said.

SBI is also talking to ITC, Drishti and Reliance for partnering as business correspondents, he added.

Another project the bank hopes to associate is with the ‘e kiosk’ programme of the Government of India and has already signed a memorandum of understanding. As the project involves setting up of 1 lakh kiosks all over the country, this could give the bank a large number of outlets, Mr Banerji pointed out.

The bank is also planning to aggressively market personal loan products in rural areas. Other initiatives include offering alternative avenues of savings like mutual funds or insurance.

The relatively higher level of non-performing assets in the agri sector is not a big concern, Mr Banerji said. “This sector being vulnerable, NPAs are without a doubt higher than in some other sectors. We have reduced it from levels of 20 per cent to single digit in the last four years,” he said.

More Stories on : Public Sector Banks | Credit Market | Farm credit | State Bank of India

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