The Hindu Business Line : Farmers’ body fears impact of credit policy

Hyderabad, May 4 The Confederation of Indian Farmers’ Associations (CIFA) has expressed fears that the recent credit policy announced by the Reserve Bank of India would have an adverse impact on the 18 per cent target for agriculture lending.

In a letter to the Prime Minister, Dr Manmohan Singh, Mr P. Chengal Reddy, Secretary-General, CIFA, said the concessions given by the apex bank would not increase production and investment finance in the agriculture sector.

He said the RBI permitted banks to classify 100 per cent of the credit under General Credit Card (GCC) and overdrafts up to Rs 25,000 against no-frills accounts in rural and semi-urban areas as indirect finance to agriculture. This meant banks could include this in the 18-per cent norm.

“As it is, considering 50 per cent of such loans as finance to agriculture is wrong as these loans are not directed to either for production or investment. Allowing 100 per cent to be counted as support to agriculture is worse still,” he said in the letter.

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