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SBI Slashes Interest Rates On Agriculture LoansBy akansha, Section Finance & Taxes
Public-sector lender State Bank of India (SBI) on Thursday slashed rates for farmers looking for minor irrigation and crop loans. As part of its special drought-relief schemes, the bank has taken this step to support farmers who have been hit by the weak monsoon this year.
SBI has reduced interest rates to 8 per cent in the first year and 9 per cent in the second and the third year for loans up to Rs 25 lakh, sanctioned till the end of March, 2010. The step is one of a series of measures being taken by the banking sector to make available easier loans to farmers hit by drought that is expected to reduce food grain production by at least 18 million tonne this year, impacting rural income. The margin money requirement for new minor irrigation loans has also been reduced to 10 per cent flat from the existing 15 to 25 per cent of project cost. Moratorium period for minor irrigation loans has been extended by a year. Repayment period for new loans has also been extended by a year. The bank has given an additional concession of 1 per cent interest for regular borrowers to encourage timely repayment. Also, the loan processing charges have been reduced by 50 per cent. In addition, SBI, while advising branches to support farmers by extending all calamity benefits, has advised its offices to release the consumption loan portion of Kisan Credit Cards to farmers to enable them meet their other needs. Source: The Indian Express SBI slashes interest rates on agri loans Click On "Full Story" For More...
Speaking to FE, Niranjan Prasha, general manager (agricultural business unit), SBI, said, "The idea is to give some relief to the drought-hit farm sector and encourage investment in minor irrigation." For those areas where regular crops have been affected and monsoon has resumed in the recent past, the bank is providing short-term crops loans for re-sowing, Prasad added.
The bank's farm loan portfolio currently stands at Rs 57,000 crore and it expects fresh disbursals of farm loans to the tune of Rs 33,500 crore by the fiscal-end.
"On a net basis, the bank would add another Rs 16,000 crore after repayment, which in return, will grow its loan book to Rs 72,000-73,000 by fiscal-end," he said. The credit pick-up on year-on-year basis in the farm-loan segment increased by 9-10 per cent to Rs 6,000 crore till the end of August. However, Prasha said SBI expects the credit growth in the sector to increase by 25 per cent by fiscal-end. The bank is planning to add 2,000 new branches during the current fiscal, out of which 60-70 per cent will be in rural areas.
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