The Hindu : Business : Bankers' meet to discuss farm credit

Online edition of India's National Newspaper
Tuesday, Jun 22, 2004

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Business

Bankers' meet to discuss farm credit

By Our Special Correspondent

CHENNAI, JUNE 21. Bankers are meeting in Mumbai on June 22 (Tuesday) will meet tomorrow under the auspices of the Indian Banks' Association (IBA) to chalk out an action programme to grow institutional credit to the farm sector to 30 per cent. The meeting comes in the wake of the new UPA (United Progressive Alliance) Government's proposal to step up credit flow to the agricultural sector.

The average growth rate of short-term institutional credit to the farm sector has remained at about 15 per cent since the 1970s. The total credit to this sector is estimated at Rs. 80,000 crores.

At tomorrow's meeting, bankers will debate on driving this up to Rs. 105,000 crores in the current fiscal. Given the complex and unorganised nature of agricultural activities in India, bankers are convinced that a fresh format may after all be needed to step up farm credit to the level desired by the new political bosses. This is essential to ensure that timely and adequate credit is made available to the genuinely needy in the farming community.

Highly-placed sources indicate that a discussion paper prepared by the National Bank for Agriculture and Rural Development (Nabard), at the behest of the Government, on the modalities of effective disbursal of increased credit to the farm sector may well come up for consideration at the meeting.

Sources said nearly 70 per cent of the Rs. 80,000 crore credit disbursed to the farm sector was through Kisan cards. There are at present about four crore Kisan cardholders.

Though Kisan cards were found to be the easiest way to disburse farm credit, sources said bankers would explore the possibilities of expanding the delivery mechanism so as to realise the full potential of agriculture as a profitable commercial proposition.

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