Banks miss farm credit target

Only eight of the 26 major commercial banks have managed to meet the target of lending 18 per cent of their net credit disbursals to the agricultural sector. Most banks failed to meet the target set by the Reserve Bank of India, and lent between 9.5 per cent and 12 per cent.

Though the total credit flow to the sector has risen in the first two years of the Tenth Plan, the increase is not commensurate with Plan projections.

This was revealed in the first report of the Parliamentary Standing Committee on Agriculture presented in both Houses. The committee has recommended that the government make it obligatory for every bank to meet the minimum stipulated farm credit target.

The committee has named the State Bank of Travancore, Bank of Maharashtra, Dena Bank, Oriental Bank of Commerce and UCO Bank for their poor performance. Corporation Bank, which lent only 9.58 per cent, was singled out in the report.

The committee has praised the State Bank of Indore, State Bank of Saurashtra and Punjab National Bank for exceeding the agriculture lending target fixed by the RBI.

Total institutional credit to agriculture is estimated to have risen from Rs 62.045 crore in 2001-02 to Rs 70,810 crore in 2002-03 and Rs 80,000 crore in 2003-04. The target for the entire Tenth Plan is Rs 7,36,570 crore, almost thrice the amount lent in the Tenth Plan.

The parliamentary committee has taken serious note of farmers having to borrow from unscrupulous private moneylenders at exorbitant interest rates, in the absence of institutional loans. It has recommended that the procedures for lending to farmers should be simplified.

"The commercial banks should reach out to farmers as they are doing in the case of housing and automobile loans so that more and more farmers are able to avail of bank loans," it suggested.

The committee has disapproved of the ceiling of Rs 50,000 for agricultural loans eligible for a lower interest rate of 9 per cent. For commercial banks, this ceiling is applicable for interest rates not exceeding the prime lending rate which is around 10-11 per cent.

Maharashtra waives loan interest for all farmers

The Maharashtra Cabinet on Thursday decided to waive interest on loans taken by all farmers across the state. Announcing this, Chief Minister Sushilkumar Shinde said the decision would cost the state exchequer Rs 345 crore.

Earlier, the government had announced the scheme for only small and marginal farmers, but now extended it to others as well in view of the drought.

The Cabinet also decided to continue the monopoly cotton procurement scheme this year. Cotton growers would get Rs 2,500 per quintal, he said.