Sonia asks banks to provide credit to farmers at low rates

Seeking to insulate small and marginal farmers from exploitation by moneylenders, UPA Chairperson Sonia Gandhi Thursday asked the banks to provide credit to farming community at lower rates of interest.

Last Updated: Feb 11, 2011, 01:00 AM IST

New Delhi: Seeking to insulate small and
marginal farmers from exploitation by moneylenders, UPA
Chairperson Sonia Gandhi Thursday asked the banks to provide
credit to farming community at lower rates of interest.

Gandhi was speaking at the launch of Financial Inclusion
campaign -- Swabhimaan -- of the government, that seeks to
provide banking services to 73,000 villages with population of
over 2,000 and open at least 5 crore new account by March 2012
under the campaign.

"One of the most important objectives of the campaign
will be to enable small and marginal farmers to obtain credit
at lower rates from banks and other financial institutions so
that they could be insulated from exploitation by
moneylenders," Gandhi said.

Speaking at the function, Finance Minister Pranab
Mukherjee said banking services would be rolled out in 20,000
villages this fiscal, but warned the banks against selecting
wrong entities as their business correspondents -- persons
acting as intermediaries between rural people and banks.

"For the year 2010-11, we have set a target of roll out
in 20,000 villages. I am confident that this target will be
achieved," he said.

Business Correspondents (BCs) are the face of the banks
and they should be conscious of reputational risks that could
arise if the wrong kind of BCs, or those who are providing
technology as backup, are selected.

With agriculture poised to grow at 5.4 per cent in the
current fiscal compared to just 0.4 per cent a year ago,
Mukherjee said this was possible partly due to phenomenal
growth in bank credit to the sector.

"This is a big improvement and is partly due to the
tremendous growth in bank credit to the agriculture sector
which is expected to cross the target of Rs 3,75,000 crore set
for the year," he added.

He, however, expressed concern that only about 38 per
cent of bank branches are in rural areas, providing coverage
to 40 per cent of the country`s population. Besides, 51.4 per
cent of farmer households in the country are financially
excluded from both formal and informal sources of credit.

Gandhi appealed to the bankers to take up this task
with a sense of responsibility and understanding and exercise
courtesy and respect, specially to small borrowers.

PTI