Nabard aid for co-op banks on farm credit

The National Bank for Agriculture and Rural Development (Nabard) has decided to extend assistance to co-operative banks in the state to fund their publicity drive for increasing credit to the farm sector.

According to the broad policy directives of the Union government, banks are expected to double disbursement of farm credit within a period of three years beginning the current fiscal.

Financial assistance will be granted to state co-operative banks and district central co-operative banks for organising borrowers' meets, bringing out publicity materials such as handbills, banners, posters and the likes and advertising in print and electronic media, Nabard said on Tuesday.

The assistance will be in the form of a one-time grant to a maximum of Rs two lakh for state co-operative banks and Rs one lakh for district central co-operative banks. The scheme will be in operation until December 31, 2004.

Bhawar Puri, chief general manager, Nabard (Gujarat), said that the assistance will be provided from the Co-operative Development Fund (CDF). The co-operative banks in Gujarat are expected to issue farm loans to the extent of Rs 2,992 crore in the current financial year alone.

Achieving this level of credit disbursement to the farm sector is a major challenge to the banking sector, especially the co-operative banks which lack network like those of nationalised banks.

A Nabard statement said that this challenge can be turned into an opportunity for business development by improving realisation of sticky loans through extension of relief measures and credit to new members.

While the government has asked banks to double disbursement of farm credit, concurrently, it has also announced various debt relief measures for farmers in distress due to natural calamities, farmers in arrears whose loans have become bad and categorised as NPAs. The measures include a one-time settlement for small and marginal farmers and assistance for redemption of debt of farmers from non institutional sources.

Although Gujarat has a net sown area of about 51 per cent, with a high proportion of land available for cultivation, there are several issues that have been hampering rapid growth in agricultural output in the state, said State Focus Paper (SFP) prepared and presented by Nabard in February last.

Low irrigation facilities, sea water intrusion, lack of co-ordinated efforts to sustain surface water, low level of awareness about credit facilities available and poor water management continue to hamper growth and these issues need to be addressed, the paper said.