The Hindu : Karnataka / Bangalore News : Banks urged to assist indebted farmers

Online edition of India's National Newspaper
Wednesday, Jul 26, 2006

Karnataka

Karnataka - Bangalore

Banks urged to assist indebted farmers

Special Correspondent

Agricultural loan mortgage product to help farmers escape moneylenders' clutches suggested

DISCUSSING FINANCE: (From left) M.B. Patro, General Manager, NABARD; C.P. Swarnkar, Chairman and Managing Director, Syndicate Bank; and George Joseph, Executive Director, Syndicate Bank, at the State-level Bankers' Committee meeting in Bangalore on T uesday. — Photo: K. Gopinathan

Bangalore: The chairman of the State-level Bankers' Committee (SLBC), C.P. Swarnkar, on Tuesday urged public sector banks to launch a farm loan mortgage product to help distressed farmers in debt to moneylenders to refinance their debts. Syndicate Bank has launched such a product.

Addressing the 98th SLBC meeting here, Mr. Swarnkar, who is chairman and managing director of Syndicate Bank, said that the loan should be made available to farmers on the condition that they would not take fresh loans from moneylenders. The banking industry should evolve products to bail out farmers from the clutches of private moneylenders.

Banks commended

Commending the State's banking sector, he said it had performed "exceedingly well" under the given parameters. The banks had disbursed Rs. 11,811 crore to the farm sector in 2005-06 against the target of Rs. 9,912 crore, registering 119 per cent in terms of achievement of the target. The aggregate agricultural credit disbursal target for 2006-07 was Rs. 14,646 crore.

Mr. Swarnkar said that about 5,57,410 more farmers had been brought into the institutional fold by providing financial support amounting to Rs. 3,518 crore. Commercial banks and regional rural banks (RRBs) accounted for 4.13 lakh of those farmers.

Gulbarga district, he said, had been selected at the last SLBC meeting for 100 per cent coverage of families through "no frills account" and issue of credit cards. A road map had been chalked out for the same, while other lead banks had selected one district each for 100 per cent financial inclusion. They were Syndicate Bank (Bagalkot), Canara Bank (Davangere), State Bank of Hyderabad (Koppal), State Bank of Mysore (Chamarajanagar), Corporation Bank (Madikeri) and Vijaya Bank (Haveri).

Under small-scale industries, the banks, including cooperative banks and the Karnataka State Financial Corporation, had disbursed Rs. 1,628 crore during 2005-06, an increase of 131 per cent over the target. The banks also had financed 171 bonded labourers who had been released with credit of nearly Rs. 50 lakh.

He said the banks had extended Rs. 38,847 crore to various segments under the priority sector, constituting 45.32 per cent of total advances, exceeding the target of 40 per cent stipulated by the Reserve Bank of India. Advances to the agricultural sector amounted Rs. 16,676 crore, accounting for 19.46 per cent of total advances, exceeding the 18 per cent stipulated by the RBI.

Under the Revenue Recovery Act, Mr. Swarnkar said that as of March, 91,569 accounts had an outstanding balance of nearly Rs. 114 crore. The number of non-performing asset accounts was over 4.5 lakh, involving an amount of Rs. 3,808 crore. The State Government machinery and corporations sponsoring the applications should assist the banks in recovering the dues.

Mr. Swarnkar urged the State Government to rationalise stamp duty on equitable mortgage to make it borrower friendly.

The general manager of the National Bank for Agriculture and Rural Development (NABARD), M.B. Patro, hoped that there would be a substantial increase in credit to the agricultural sector and also suggested to the Government to release the subsidy due to small-scale units.

The general manager of the RBI, V. Vasanthan, while appreciating the efforts of the banks in rural credit, hoped that short-term credit up to Rs. 3 lakh would be made available at 7 per cent interest as per the RBI guidelines.

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