The banking system may have to convert around Rs 4,000 crore worth short-term agriculture loans into long-term loans due to the severe drought that hit parts of the country last year, according to an assessment made by the National Bank for Agriculture and Rural Development (Nabard).
In fiscal 2002-03 banks have already converted short-term agriculture loans valued at Rs 450 crore into long-term loans due to the inability of farmers to service the loans.
Further, meeting the 10th Five Year plan target of Rs 7,36,000 crore for agriculture lending could prove to be a tall order as in the first year of the Plan (2002-03), the credit offtake on this account is estimated in the region of Rs 70,000-75,000 crore.