Agriculture lending rates of co-operative banks & bodies cut

The MP government has decided to cut agriculture lending rates of co-operative banks and co-operative bodies from 11 per cent to 7 per cent.

"The decision has been taken today," a senior official told Business Standard, adding, Chief Minister Shivraj Singh Chouhan discussed the issue with senior officials and bankers today.

Further, the mandatory provisions of the 'No Dues Certificate" have been done away with. At present, priority sector loans are disbursed only when a loan taker (mostly farmers) produce a 'No Dues Certificate' from banks. The banks levy charges for this.

"Under the new system, following Reserve Bank of India guidelines, the concerned bank (offering loan) will send a specific communication enclosing the list of applicants to other banks to tally the list. If no response is received from the other banks the concerned bank may presume that the loan has no dues," said a senior government official.

The state chief minister also exempted farmers and self-help groups from stamp duty on agriculture sector loans.

However the exemption limit has been capped at Rs 10 lakh. Announcing the decision state chief minister Shivraj Singh Chouhan in a state level bankers committee meet here today lauded bankers effort for doubling agri-credit within two years against stipulated time of three years.

The bankers committee however released a press communiqué in this regard twice and restricted the announcement on stamp duty exemption of the chief minister to farmers only. "The decision on offering exemption on stamp duty for self-help groups has already been taken three months back," a senior bank official said.

The state has 66 lakh farmers who seek loan with a variable stamp duty rates, probably highest in India.

Although government officials were unable to quote the exact figure of revenue burden on state exchequer with this decision, Pravesh Sharma secretary agriculture told Business Standard, "Stamp Duty rates vary from a minimum 3% of the total loan amount."

According to data received from banks show that bankers have registered a growth of 6.45% in agriculture advances from Rs 13590 crore as on March 2006 to Rs 14581 as on March 2006. While Madhya Pradesh annual credit plan data indicates that the state has achieved 117.07% growth in 2005-06 and an amount of Rs 6954 crore was available to farmers against the targeted plan of Rs 5940 crore.

Under the annual credit plant, the percentage share of private banks in agriculture is hardly 0.48%, nationalised banks have 34.73% and district cooperative banks have 41.43%.

On SHGs front, the state has hardly linked 50000 SHGs, out of 4.50 lakh self-help groups. During 2006-07, the Nabard has planned to link 25000 new Self Help groups.