BoI partners with NBHC for agri loans

Bank of India (BoI) has tied up with National Bulk Handling Corporation (NBHC) for lending to farmers against warehouse receipts at 10.25 per cent, 50 basis points (bps) lower than the normal agri lending rate of 10.75 per cent.

While one basis point is one hundredth of a percentage point, BoI's rate for lending against warehouse receipts is 2.75 per cent lower than its benchmark prime lending rate (BPLR) of 13 per cent.

Since the lending against warehouse receipts is for a one-year period, a farmer eligible for a loan of up to Rs 10 lakh needs to repay the interest at 10.25 per cent over a period of 12 months.

Announcing this at the MoU signing ceremony with NHBC, Amit Roy, senior manager, BoI, said the bank had set a target of Rs 11,000 crore for crop financing in the current financial year and Rs 3,550 crore for lending under collateral management for 2007-08. In addition to this, the bank was planning to lend Rs 2,000 crore (Rs 1000 crore achieved last year) under warehouse receipts financing, while NHBC has earmarked Rs 1000 crore for the current year.

NBHC is an ISO 9001:2000 and ISO 22000:2005 certified company that provides commodity and collateral management services to private and public sector undertakings. The company procures, warehouses, assays, certifies and delivers agriculture commodities at the disposal of customers.

The MoU, signed on Monday, is significant as the bank accounts for roughly 20 per cent of the total lending against warehouse receipts on agricultural commodities.

Moreover, BoI has set a total target of Rs 7,550 crore for production and investment in agri finances, expected to benefit approximately 1,18,000 farmers. BoI, through its 29 agriculture zones out of the total 48, had achieved an agri financing target of Rs 27,250 crore and total agriculture credit of Rs 60,000 crore during the last financial year ended March 31, 2007.