SBI stops funding of farm equipment

Rising non-performing assets have forced State Bank of India, the country’s largest commercial bank...

Rising non-performing assets (NPAs) have forced State Bank of India, the country’s largest commercial bank, to put on hold financing of agri-equipment like tractors and power tillers. This has happened at a time when the Union government is going ahead with its Rs 60,000 crore plan to waive farmers’ loans. The bank’s exposure to the tractor and power-tiller segment is around Rs 7,000 crore.

Confirming the decision to suspend financing of tractors and power-tillers, SBI chief general manager (rural business) Shyamal Acharya said, “Non-performing assets in this segment have grown substantially to 15-17 per cent. We have not fixed any timeline as to how long the hold on financing will be effective. As the position improves in different parts of the country, we will again open up to financing in such parts.” He added, “Despite the farm-loan waiver announced in the Union budget this year, we had to take the step as heavy farm equipment, like tractors and power-tillers, are bought by large farmers and the one-time settlement scheme will not help bring down the bank’s non-payment overdues in this segment.”

According to a banking analyst, NPAs of 15-17 per cent in any sector are considered beyond the tolerable level. “Ultimately, it’s the depositors’ money. The bank will have to safeguard the interest of depositors. If bad loans are allowed to escalate without any controls, it will threaten the existence of the bank. One reason for high defaults may be the rise in interest rates,” he said.

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SBI’s bad loans, or NPAs, jumped by 28.3 per cent to Rs 12,837 crore during the financial year 2007-08 from Rs 9,998 crore in the previous year. Under Reserve Bank of India (RBI) rules, when the interest or principal of a bank loan is defaulted for 90 days, it’s classified as a non-performing asset (NPA).

SBI has also asked all its branches to get in touch with tractor dealers and get details of tractor borrowers and educate them about the benefits under the Debt Relief (one time settlement) Scheme announced by the government for distressed farmers. “Our bank has a large portfolio of tractor loan accounts with overdues and farmers in distress can avail benefits under these schemes,” SBI said in a circular issued to its branches.

According to the RBI, credit to agriculture and allied activities showed a rise of 16.4 per cent, or Rs 34,013 crore, to Rs 241,802 crore during the period ended February 15, 2008.

Agriculture Agony

•SBI has a tractor loan portfolio of Rs 7,000 crore

•NPAs constitute 15-17% of advances

•SBI to resume agri-lending once situation improves

Railway authorities promptly took action, shifting passengers to other coaches and quickly extinguishing the fire.

Fire noticed in coach of Amritsar–Saharsa Garib Rath Express, no casualties reported

India47 min ago

A fire broke out in a coach of Amritsar–Saharsa Garib Rath Express at Sirhind Station in Punjab, but no casualties were reported. Railway officials quickly took action, shifting passengers to other coaches and extinguishing the fire. The train will depart to its destination shortly. The incident occurred at 07:30 hrs and is currently being investigated.

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