Crop loans: Private banks get interest subvention booster

Crop loan borrowers, who were hitherto getting credit from nationalised banks, can now turn to private banks too for support.

The Finance Minister’s announcement extending interest subvention on short-term crop loans to private banks would make crop loan rates from these banks competitive. This will also ensure them a level-playing field along with their public sector counterparts.

Interest subvention is an interest subsidy. The Government has been providing 2 per cent interest subvention on crop loans to public sector banks. This is now being extended to private banks

The old private sector banks had been seeking the banking regulator’s help to get the Finance Ministry extend the interest subvention to them for some time now.

And the move is expected to help such of those old private banks, which have their branches in close vicinity of public sector bank branches in rural areas.

Hailing the move, K.S.R. Anjaneyalu, Managing Director, Lakshmi Vilas Bank, said that it will give an impetus to private banks to participate in crop loans as, at present, there is lot of thrust for opening of rural branches.

Welcoming this, P. Jayarama Bhat, Managing Director, Karnataka Bank, said this move will help private banks to provide maximum facilities to the agriculturists on par with the PSU peers.

The Chief Executive Officer of City Union Bank, N. Kamakodi, said the extension of interest subvention to private sector banks would be a major weapon for these banks to achieve their farm loan target.

“We will now be able to achieve our agri credit target without much of an effort. Our borrowers will be the beneficiaries of the move,” said Venkatraman, Managing Director, Karur Vysya Bank.

Ajai Kumar, Chairman and Managing Director, Corporation Bank, said that now there is a level-playing field for private banks.

vinayak.aj@thehindu.co.in

revathy.lakshminarasimhan@thehindu.co.in

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