The Hindu Business Line : Nabard plans farmers’ SHGs to expand lending

Kolkata, July 22 With an aim to facilitate agricultural lending among small and marginal farmers, the National Bank for Agriculture and Rural Development (Nabard) would help in the setting up of self-help groups (SHGs) of farmers, which can be directly credit-linked with banks, according to Mr U.C. Sarangi, Chairman, Nabard.

Nabard plans to launch the project on a pilot basis in five-to-six States to begin with. This will facilitate banks to extend agricultural finance to small and marginal farmers on a group liability basis and can ensure timely repayment of loan, said Mr Sarangi, addressing the Banking Conclave 2008, organised by the Federation of Indian Chambers of Commerce and Industry (Eastern Region) here on Tuesday.

The small and marginal farmers are usually left out of the purview of banking facilities, as banks are not confident about their repayment capacities. “The recovery rate in case of SHG lending is as high as 95-98 per cent in almost all States. Forming such groups of farmers will therefore help banks lend money without worrying about defaults,” he said.

Ensure proper utilisation

Nabard plans to conduct counselling sessions for farmers in order to ensure proper utilisation of the credit. “We plan to impart credit counselling, marketing counselling and technology counselling in order to ensure the maximum utilisation of credit extended,” he said.

Expected growth

According to him credit deployment by commercial banks, co-operative and regional rural banks has picked up in the last four to five years. “The credit deployment in the agriculture sector in 2007-08 was Rs 2,40,000 crore and we expect it to grow it to Rs 2,80,000 crore in 2008-09,” he said.

Nabard expects its refinance to various financial institutions to grow by 33 per cent at Rs 32,000 crore in 2008-09, up from Rs 24,000 crore last year. It has also earmarked Rs 7,000 crore for providing liquidity support to financial institutions.

Nabard, according to its Chairman, would consider raising money through bonds in order to meet its loan growth. Nabard currently has a kitty of Rs 13,000 crore which includes Rs 5,000 crore obtained from Government, Rs 5,000 crore from internal accruals and the remaining Rs 3,000 crore raised from the markets this year.

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