The Hindu Business Line : Govt to nudge banks to lend more to organic farming

New Delhi, Dec. 7 The Finance Minister, Mr P. Chidambaram, on Friday assured the Lok Sabha that he would encourage public sector banks (PSBs) to lend more for organic farming.

He also made it clear that banks don’t make any distinction between chemical fertilisers and organic farming and that all concessions available to the farm sector would be available for organic farming also.

“At the next review meeting on performance of public sector banks, I will surely encourage them to lend more for organic farming,” Mr Chidambaram said during Question Hour.

He was replying to a supplementary on whether Government proposes to extend loans with concessional rate of interest to farmers who propose to undertake organic farming methods.

To ensure that farmers receive short-term credit at 7 per cent with an upper limit of Rs 3 lakh on the principal amount, public sector banks, regional rural banks and cooperative banks were being provided interest subvention at 2 per cent per annum on their involvement of funds. The Government was also providing interest subvention to Nabard for concessional refinance to RRBs and cooperative banks for this purpose. This scheme, since its introduction from Kharif 2006-07, was applicable to organic farming also.

To a supplementary on whether the Government would help reduce interest rate on crop loans from 7 per cent to 4 per cent, Mr Chidambaram said that any suggestion for further reduction in interest rate on crop loans to farmers would be “considered sympathetically” by the Government.

Mr Chidambaram also said that the Government was examining the Vaidyanathan-II report on long-term credit. “There has already been one meeting with the State Governments. There is some consensus. We have written to the State Finance Ministers,” he added.

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