Buoyed by the robust demand for tractor loan from Punjab and Haryana, Kolkata-based asset finance company Magma Fincorp Limited is contemplating to finance entire range of agricultural equipment.
In the current financial year, besides tractor, it would finance harvesters, rotavators, drip irrigation system and in the next fiscal year it would extend it to other agricultural equipments deployed in the farm sector.
Speaking to Business Standard, Sanjiv Jha, national sales manager - Suvidha, Magma Fincorp Limited said, "There is a huge scope in financing agricultural equipments. Already, we are doing very good as far tractor financing is concerned, now we are planning to finance agricultural equipments too. We would start financing harvesters, rotavators, drip irrigation system in this year and by next year, we are planning to finance other agricultural equipment also."
Magma had disbursed Rs 798 crore in Punjab and Haryana last year, of which the total share of tractor loan was Rs 115 crore. So, the company sees huge potential in financing agricultural equipment.
Further, Haryana and Punjab are among the top states in farm mechanisation. Initially, farm mechanisation was a "tractorisation" process, however, the introduction and use of other farm equipments like power tillers, bullock or tractor drawn implements, reapers, threshers, zero-till seed-cum-fertilizer drill, raised bed planters and rotavators have also increased significantly over the year, pushing up the credit.
The shortage of farm labour in Punjab and Haryana - also known as the food baskets of India - has propelled the demand of farm equipments, which in turn, could boost credit growth, according to a paper prepared by the National Bank for Agriculture and Rural Development (Nabard).
The paper says there is a credit potential of Rs 3,400 crore for the financial year 2013-14 for farm mechanisation, an estimated increase of about 20 per cent over the last financial year. According to the paper, the credit potential for the financial year 2013-14 has been estimated under farm mechanisation at Rs 1,990.74 crore for Punjab. For Haryana, it is Rs 1,412 crore.
