Move aimed at helping drought-hit farmers.
State Bank of India (SBI), the country’s largest lender, today slashed interest rates for minor irrigation (like wells and pump sets) and crop loans above Rs 3 lakh to support farmers hit by weak monsoon and drought.
The rate cut could be as high as up to 525 basis points.
The rate on new minor irrigation loans has been reduced to 8 per cent for the first year and 9 per cent for the next two years. This concessional rate will be applicable for loans up to Rs 25 lakh that are sanctioned and disbursed till March 2010. Earlier, the bank was charging between 10.5 per cent and 13.25 per cent on these loans.
The new rates will be applicable for loans granted in 2009-10. Hence, farmers who took loan in April 2009 would benefit even though the scheme had been announced now, SBI General Manager Niranjan Parsha said. The margin money requirement for new minor irrigation loans has been reduced to 10 per cent from the existing 15-25 per cent of the project cost. The moratorium period for irrigation loans has been extended by one year due to the drought situation.
Also, the repayment period for new loans will be extended by one year. The loan processing charges have been reduced by 50 per cent.
For crop loans, the lender has reduced the rate to 10 per cent for the first year. This rate is available for advances of Rs 3-25 lakh sanctioned and disbursed till the end of March 2010.
As a step to encourage timely repayment, regular borrowers will get 1 per cent additional concession for prompt repayment.
Parsha said the SBI’s outstanding farm loan portfolio was Rs 57,000 crore, out of which crop loans were to the tune of Rs 24,000 crore. In addition, the lender has advised its offices to release the consumption loan portion of Kisan Credit Cards to farmers to enable them to meet their other needs.
The offers would be applicable on all agricultural loans disbursed between April 1, 2009, and up to March 31, 2010, Parsha said.
“We have designed this scheme to benefit farmers both in kharif and rabi seasons,” Prasha said.
In February, the country’s largest bank had offered loans to farmers against cold storage and warehouse receipts at 8 per cent for one year.
| HELPING HAND Interest rate under the special drought relief scheme | ||
| Category of loans | Existing interest rate | Concessional interest rate |
| MINOR IRRIGATION Term loans up to Rs 25 lakh repayable in 3 years and above | 10.50 per cent per annum to 13.25 per cent per annum (floating) | a) 8 per cent per annum (fixed) in the first year. b) 9 per cent per annum (fixed) in the second & third year. c) Normal interest rate (floating - card rate) from 4th year onwards |
| CROP LOANS i) Credit limits up to Rs 3 lakh ii) With credit limits above Rs 3 lakh and up to Rs 5 lakh iii) With credit limits above Rs 5 lakh and up to Rs 25 lakh | i) With interest subvention 3 per cent, effective rate is 7 per cent per annum ii) 11.75 per cent per annum (floating) iii) 12.75 per cent per annum (floating) | i) No change ii) & iii) 10 per cent per annum (fixed) for one year from the date of disbursement |
Crops have been hit by drought in several districts of the country. According to latest data, rainfall is 25 per cent below normal, compared with 32 per cent deficiency in June.
Of the 36 meteorological sub-divisions, cumulative rainfall between June 1 and August 26 has been excess or normal in 13 sub-divisions, and deficient-to-scanty in over 23. Poor monsoon has severely hit sowing of kharif crops such as rice, oilseeds and coarse cereals.
