Banks feel farm credit hike won’t hit profits

‘‘Action plans prepared by lending institutions indicate that agriculture credit will be enhanced to about Rs 1,05,000 crore in 2004-05, representing a 30 per cent increase over the flow of credit in the previous year,’’ National Bank for Agriculture and Rural Development chairperson Ranjana Kumar said after a meeting with bankers here.

She said each rural and semi-urban branch of commercial banks would take up 2-3 investment projects in plantation and horticulture, fisheries, organic farming, agro-processing, livestock, micro-irrigation, sprinkler irrigation, watershed management, village pond development etc.

In every district commercial banks would finance 10 agro-clinics during the current year and NABARD would finalise a programme for agro-clinics after discussions in state-level banking panels.

The growth in farm credit by PSBs is already in the range of 22-26 per cent and the 30 per cent growth target can be comfortably achieved. The recovery rate of agriculture credit (75-90 per cent) is better than the average recovery rate (54-55 per cent) of PSBs and also non-performing assets levels are not very high, Indian Banks’ Association (IBA) Chairman V Leeladhar said. Bank chiefs and Nabard officials had a detailed discussion on the farm credit package in Mumbai on Tuesday.

‘‘The total farm credit disbursement by commercial banks in 2003-04 was Rs 43,000 crore and in the fiscal 2004-05 we have to disburse Rs 57,000 crore to the sector,’’ Leeladhar said. The share of regional rural banks would be hiked to Rs 8,500 crore and cooperative banks to Rs 39,000 crore. The finance minister has asked banks to lend up to Rs 105,000 crore to the farm sector.

The IBA has prepared an action plan to achieve 30 per cent growth in disbursement and the detailed guidelines will be issued in a week, Leeladhar said.