The Hindu : Business : Banks to bring in more farmers under agri-credit

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Wednesday, Jun 23, 2004

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Business

Banks to bring in more farmers under agri-credit

By Our Special Correspondent

MUMBAI, JUNE 22. Commercial banks would make an effort to bring into their fold, on an average, at least 100 new farmers at each rural and semi-rural branch during the current financial year under the framework of Special Agricultural Credit Plan. The goal is to enlarge the universe of new farmers borrowing from banks by about 50 lakhs.

The National Bank for Agriculture and Rural Development (Nabard) today held discussions with commercial banks to discuss ways and means to implement these policies. Nabard with State cooperative banks and Regional Rural banks (RRBs) would hold similar meetings.

"We would focus on farmers in distress areas and do a study to launch a scheme to takeover funds lent by moneylenders in select states," said Ranjana Kumar, Chairperson, Nabard, while addressing a press conference here today after meeting top officials of commercial banks. V. Leeladhar, Chairman, Indian Banks Association (IBA) and Chairman Union Bank of India, who also addressed the meeting commented, "Lending to agriculture is profitable and we are looking at various schemes." Farmers who have suffered production and income losses on account of successive droughts, floods or other calamities (in districts declared as calamity-affected by the State government concerned) will be given debt relief, and their debts will be rescheduled and restructured. Interest outstanding in the accounts of such borrowers will be clubbed with the principal outstanding on March 31, 2004, and the amount thus arrived at shall be repayable over a period of five years, at current interest rates, including an initial moratorium of two years. Guidelines will be issued by Nabard for co-operatives and RRBs, and by the respective commercial banks for their own borrowers for rescheduling of loans in default.

The guidelines for increasing the flexibility of banks and co-operatives to grant a one-time settlement (OTS) for small and marginal farmers who have been declared as defaulters and have become ineligible for fresh credit from lending institutions will be issued by Reserve Bank of India/Nabard. Nabard will advise District Level Technical Committees (DLTCs) to immediately review the scales of finance to meet the realistic credit needs of farmers, especially capital-intensive agricultural operations.

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