The Hindu Business Line : Banking on agri-credit

STATE Bank of India, the country's biggest lender, is targeting disbursements of Rs 400 crore for the agriculture sector in the State of Maharashtra alone, by the end of this financial year.

In the first six months of the current fiscal, the bank already completed disbursements of up to Rs 200 crore. Outstandings in the State amount to Rs 135 crore and this figure is expected to go up to Rs 260 crore by the end of this fiscal, according to Mr Ramesh Kumar, Chief General Manager, State Bank of India.

There is a general change in attitude among bankers when it comes to agriculture. It is being viewed as agri-business, rather than just an occupation of the farmers. The bankers are aware that their role is to create access to assured and immediate credit, he said.

In a bid to increase the flow of credit to agriculture, SBI has got into several "contract-farming" arrangements over the past couple of years. Currently, the bank has 11 contract-farming arrangements, in which SBI has invested Rs 15 crore so far. The investments are expected to go up to Rs 30 crore by the end of this fiscal, according to Mr Kumar.

Some of the contract-farming arrangements that SBI is involved in at present include a tie-up with Harneshwar Agro for growing pomegranates, a tie-up with Nina Foods for growing baby corn, and a similar arrangement with a company called Dynamics for dairy farming.

Dynamics, which is involved in dairy-farming activities, has a 1.2-million-litre processing capacity plant, which supplies to companies such as Nestle and Britannia. They have a modern infrastructure plant but not enough milk supply. "We have entered into a tripartite agreement where the bank will finance farmers who will supply milk to them," said Mr Kumar.

In another year, the bank expects to finance farmers to the extent of Rs 50 crore through this arrangement, he said.

Micro-finance is emerging as another thrust area for SBI. The bank is in the process of forming and promoting more and more self-help groups (SHGs). In the current financial year so far, the bank has done 5,000 linkages and expects to complete a total of 15,000 linkages by the end of this financial year.

The bank has lent around Rs 17 crore to SHGs this year and expects to lend up to Rs 40-Rs 50 crore by the end of the current fiscal.

"Maharashtra does not have enough good NGOs and that is a weakness. That is one of the reasons that not too many SHGs have been formed and linked in Maharashtra. The role of the NGOs is towards nurturing the SHGs so that they grow out of dependency. SBI has given various NGO's several incentives to nurture SHGs. In many cases, the bank officials themselves take on the role of NGOs and help form and nurture SHGs," said Mr Kumar.

More Stories on : Public Sector Banks | Farm credit

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

Stories in this Section
Clear shift in RBI's monetary stance

Bond market stays tight despite RBI intervention

Ministry wants RBI to review ownership norms for private sector banks

Banking on agri-credit

Allahabad Bank targets agri-credit above Rs 3,000 cr

United Bank targets diversified loan portfolio

SBH sanctions loans worth Rs 150 cr

Diwali offer from SBI

Payment to Vasavi depositors