Financial Daily from THE HINDU group of publications
Thursday, Jan 08, 2004

News
Features
Stocks
Cross Currency
Shipping
Archives
Google

Group Sites

Money & Banking - Farm credit
Agri-Biz & Commodities - Farm credit


Rate war spills over to farm loans sector

L.N. Revathy

Coimbatore , Jan. 7

THE rate war is on. Not just in home loans but in priority sector lending and farm loans in particular. The nationalised banks are competing with each other to offer a better rate to the farm sector.

The Agriculture Development Branch (ADB) of the State Bank of India in Udumalpet has extended a total credit of Rs 1.29 crore to 771 farmers, who have taken to maize cultivation under contract farming. "We have lent them at a concessional rate of 8.75 per cent," says the Branch Manager Mr N. Arumugham.

SBI has tied up with the city-based Prime Bio Products (India) Ltd - a farm service provider and with the Mumbai-based Mahindra Sulabh. While the farm service providers supply the technical guidance and inputs, the bank supports by extending timely finance, direct to the growers.

According to the Managing Director of Prime Bio, Mr Vikram Mohan, the onus of repayment rests with the company as per the agreement. The AGM of the Agricultural Technical Cell of SBI in Chennai Mr D. Janakirama Raju expressed confidence about a cent per cent recovery this year. "Despite the dry weather conditions, the crop yield levels looks promising," he said.

According to him, the recoveries would be made after realisation and not after harvest. With Prime Bio assuring to buy back the produce at the market rate this year, the farmers appear the contented lot.

While the company is targeting the small and medium farmers with a holding of not more than 4 acres to bring within its fold for extension of the contract-farming concept, the farmers in Udumalpet belt revealed that financial support from banks was not a problem any more. The farmers in that belt are an enlightened lot. They are aware of the market rate - both for availing credit and for the produce. "The rate charged by the cooperative society is high when compared to bank rate, and the assistance is not available on time," Mr P. Navaneethakrishnan of Alampalayam Village said.

According to the farmers, there was a minute difference in the rates offered by the different banks in that belt. Farmers on their part prefer to wait and get the best rate possible. Bankers concede that with the industrial off take being low, the thrust was on farm lending and this space offered enormous scope.

More Stories on : Farm credit | Farm credit | Interest Rates

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page



Stories in this Section
Rate war spills over to farm loans sector


Rupee up 6 paise; securities buoyant
Banks not equipped fully to handle online clearing
Federal Bank attains total connectivity
Nabard aid for Pochampally weavers
Pravasi insurance counter at NIC
Narmada Chematur paper upgraded
Lord Krishna Bank opens two branches in National Capital Region
J&K Bank net up at Rs 110 crore
Union Bank to sell life insurance products over the counter
Corpn Bank board meet
T.R. Ramachandran to head Citibank cards unit
Pankaj Razdan is new MD of Pru ICICI



The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line