RBI policy set to increase farm credit: Rajnath

Commenting on the RBI decision that investment by banks in securitised assets representing direct/indirect lending to agriculture would be treated under priority sector lending, provided the securitised loans were from the amount internally mobilised by the lending institutions, Singh said this would encourage banks to lend more as it was covered under the priority sector.

He also welcomed the decision allowing banks to waive off margin money or security deposit requirements on loans up to Rs 50,000 for agri-business and up to Rs 5 lakh for agri clinics. He said the agriculture ministry had been demanding that the limit of collatarel free agricultural loans be increased to at least Rs 50,000.

Singh said the RBI has proposed that loans extended for short duration crops would be treated as non-performing assessts (NPAs) if only the instalment of the principal or interest thereon remained unpaid for two crop seasons beyond the due date. He said this measure would help banks reduce their NPAs relating to agriculture loans, lower the risk coast of banks and the banks may find lending to agriculture sector more profitable.