The Hindu Business Line : Indian Bank channels credit direct to farmers

Mr M.B.N. Rao, CMD, Indian Bank (right), with Mr T.S. Narayanasami, Chairman and Managing Director, Andhra Bank and Mr R. Balakrishnan, ED, Andhra Bank (left), at the signing of an agreement in Chennai on Monday. — Bijoy Ghosh .

Chennai , June 28

INDIAN Bank has begun entering into formal arrangements with corporates and self help groups (SHGs) to bypass the rural economy's middlemen and thereby lower the cost of a farmer's access to agricultural inputs and consumer goods.

The bank has entered into an agreement with tractor manufacturer Mahindra & Mahindra and more such deals with other tractor and fertiliser companies are being negotiated, said Mr M.B.N Rao, Indian Bank's Chairman and Managing Director.

Under the new plan, Indian Bank supplements the traditional role of credit disbursal by training select SHGs. Subsequently, the corporates which have entered into a deal with Indian Bank would use the SHGs to sell agricultural inputs.

The arrangement benefits farmers by bringing down their cost as middlemen are by-passed, said Mr Rao. He added that SHGs would also be used to sell consumer goods too in rural areas.

Among the SHGs Indian Bank deals with are Perumanur Magalir Sangam and Periyagoundarpuram Magalir Sangam, based in Tamil Nadu.

Mr Rao was upbeat about the new arrangement's impact on Indian Bank's rural business. He estimated the current financial year's disbursement to agricultural sector would grow by 54 per cent to Rs 2,130 crore (Rs 1,379 crore).

Mr Rao felt the growth in rural business would not affect delinquency rates, as instances of deliberate delinquency in rural areas were low.

"A farmer is much more conscious of retaining his creditworthiness and reputation," he said.

Indian Bank plans to increase its presence in the post-harvest phase of the rural economy. Mr Rao said the bank had begun financing storage facilities for agricultural produce.

Indian Bank has "rehabilitated" 10,147 farmers to the extent of Rs 22.8 crore, said Mr Rao.

He added that the rehabilitation was not in response to recent instances of farmers killing themselves, but had started earlier.

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