Agri debt revamp norms soon

The Indian Banks' Association and the National Bank for Agriculture and Rural Development will shortly unveil guidelines pertaining to restructuring of debt of farmers affected by successive droughts, floods or other calamities.

They will also come out with a scheme that will provide relief to farmers indebted to money lenders.

As successive droughts have driven a large number of farmers to desperation, in many cases even to suicide, it is felt necessary to provide some debt relief to farmers within the limits of financial prudence.

A sub-group of the IBA will ready guidelines relating to debt restructuring (as opposed to debt write-off) and a scheme on freeing farmers from the clutches of money lenders in a week's time.

Emphasising that lending to agriculture sector is a viable commercial proposition, IBA chairman V Leeladhar said banks have expressed confidence that they could comfortably achieve 30 per cent growth in credit to this sector in this fiscal over the previous year.

To meet this growth target, banks (commercial banks, regional rural banks, co-operative banks) will be required to collectively lend Rs 1,05,000 crore as against Rs 80,000 crore in the year-ago period.

This fiscal, commercial banks will lend Rs 57,000 crore to the agriculture sector as against Rs 43,000 crore last year.

RRBs will lend Rs 8,500 crore (Rs 6,080 crore in 2002-03). These banks have an aggregate investment of Rs 33,063 crore with their respective sponsor banks. After accounting for the SLR requirements and providing for adequate margin, it has been estimated that RRBs may withdraw Rs 2,443 crore for on-lending.

Co-operative banks will lend Rs 39,000 crore (Rs 30,080 crore). Of the expected growth in deposits of Rs 8,000 crore, co-operatives will be persuaded to utilise Rs 4,000 crore for agriculture lending.

Under the framework of special agricultural credit plan, commercial banks will make an effort to bring into their fold, on an average, at least 100 new farmers at each rural and semi-urban branch during the current year. The goal is to enlarge the universe of new farmers borrowing from banks by about 50 lakhs.

Each rural and semi-urban branch of commercial banks, on an average, will take up at least two to three new investment projects in plantation and horticulture, fisheries, organic farming, agro-processing, live-stock, micro-irrigation, sprinkler irrigation, watershed management, village ponds development and other agricultural activities.

In every district, on an average, all commercial banks put together will finance 10 agro clinics during the current year.

In order to provide credit to tenant farmers and oral lessees, Nabard will facilitate formation and financing of self-help groups of tenant farmers and oral lessees during the current year.

Farmers are a better credit risk than corporates, if recovery figures are anything to go by. V Leeladhar, chairman and managing director, Union Bank of India, said recoveries from the agriculture sector varied between 75 per cent and 90 per cent. In sharp contrast, recovery from corporate India was lower at 55 to 60 per cent.