SBI presages doubling of priority loans book

State Bank of India expects to end the financial year 2003-04 with a 100 per cent jump in disbursements to the priority sector.

As against Rs 2,000 crore disbursed in fiscal 2002-03, the bank is likely to end the current fiscal with disbursals of Rs 4,000 crore to the priority sector.

In the April 2003 through January 2004 period, SBI has made advances aggregating Rs 1,900 crore to the priority sector (Rs 1,300 to agriculture and Rs 120 crore by way of tractor financing).

In FY 2003-04, disbursements for the tractor segment is pegged at Rs 500 crore while that for the agriculture sector at Rs 3,500 crore. Priority sector advances account for close to 40 per cent of the net bank credit.

"A good monsoon coupled with robust agriculture production are the main reasons for increased credit offtake. Typically, disbursements in the third quarter are high," said ES Balasubramanian, deputy general manager, SBI.

According to C Sundarashyam, chief general manager, SBI, the bank's exposure to the tractor segment will be ramped up to Rs 1,500 crore in the coming financial year.

"SBI is well positioned for lending to the agriculture sector due to its large network of branches. We have 1000 agriculture development banking branches and 6,000 rural and semi-urban branches," he said at a press conference in Mumbai to announce SBI's tie up with Same Deutz-Fahr India for providing tractor finance.

Sundarashyam pointed out that SBI had tractor financing tie-ups with Mahindra & Mahindra, Tafe, Escorts and Punjab Tractors.

The bank is also in talks with six other tractor manufacturers, including HMT, New Holland, Eicher, etc. The 10 tractors manufacturers account for almost 90 per cent of the market.

As per the memorandum of understanding between SBI and Same Deutz-Fahr, the bank will provide 90 per cent loan at 10.25 per cent (for loans above Rs 2 lakh) and at 9.75 per cent (for loans up to Rs 2 lakh) interest, making it the lowest interest rate in tractor finance in India.

Commenting on the delinquency rate in lending for tractors, Sundarashyam said that the level of NPA in priority sector lending is as high as 19 per cent.

Same Deutz-Fahr India, which is seeking to get a foothold in the highly competitive tractor market, is trying to lure the Indian farmer by giving him a discount up to Rs 5,000 per tractor and free accessories worth Rs 3,000 to 5,000 depending on the range of the tractor. The company will also give a warranty of three years to a farmer under the 'SBI- Same Tractor Finance' deal.