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UTI Bank signs pact with U.K. firm

By Our Special Correspondent

MUMBAI SEPT. 15. UTI Bank today signed an agreement with Enterplan of the U.K. to support a project to fund eucalyptus plantation farming near Bhadrachalam in Khammam district of Andhra Pradesh, which would involve lending to small and marginal farmers.

The Financial Deepening Challenge Fund (FDCF) set up by the U.K. Government's Department for International Development (DFID) will financially support the project in the form of a capacity grant (on a matching funds basis towards the overall infrastructure and set-up costs to be incurred on the project).

UTI Bank's agreement with Enterplan, which is appointed by DFID, U.K., to manage FDCF worldwide, along with Deloitte & Touche, will enable a grant of British pound sterling 92,083 to be made to the bank over the next three years, by which time the project is expected to have become self-sustainable.

The project involves UTI Bank providing a long-term loan for five years to small and marginal farmers through a Plantation Farmers Cooperative Society formed at villages around Bhadrachalam for the purpose of undertaking contract farming under a social forestry project. "A corporate house will provide assistance in agri-extension activities such as procurement and supply of agri-inputs at low costs, technical advice in plantation and productivity, training to farmers and identification and screening of borrowers.

"At the end of five years the corporate house will buy back the harvested tree produce, as part of their raw material requirement, from the farmers at an earlier contracted price and remit the loan repayments to the Bank directly. The farmers would benefit in terms of availability of low cost organised credit and stability in harvest price realization," stated a bank release.

P. J. Nayak, Chairman and Managing Director, UTI Bank, stated that this was another step in augmenting the bank's priority sector lending and more so in direct agriculture, reaching out to small and marginal farmers who stand to be considerably benefited by this project.

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