The Hindu Business Line : SBI priority loans for contract farming

STATE Bank of India is planning to extend financial support for contract farming. This is on the bank's priority list, as it is estimated to garner about Rs 500 crore from this venture during the current fiscal. The Chairman, Mr A.K. Purwar,said that under contract farming, the bulk purchaser, the individual farmer and the bank would enter into a tripartite agreement whereby the bank would finance a cluster of farmers who supply products to the contract farming company.

The company would undertake to repay the bank's loan to the farmers. He said interest rate of eight and half per cent would be charged for loans up to Rs 50,000 and a prime lending rate of 10.25 per cent would be charged for the next slab, Rs 50,000 up to Rs 2 lakh and anything above would be charged a little more.

Mr Purwar said the contract farming exercise was on at more than 50 modules in 14 circles spread across the country, but Pune had taken the lead with the signing of six MoUs. These include Dynamix Dairy Industry Ltd, Baramati (milk products), Champagne Vineyards, Narayangaon, Tata Chemicals Ltd, (for grapes and pomegranate) Harneshwar Agro Products Power and Yeast India Ltd, (sugarbeet and pomegranate), Nina Foods Ltd (baby corn) and B. G. Chitale Dairy Farms, Bhilavadi.

He said the bank was also looking at contract farming of floriculture.

The bank officials said that they expected Rs 25-crore business.

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