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Government cuts interest on farm loans
New Delhi, July 16: Government today nearly halved the interest rate on agriculture credit to a maximum of 9.0 per cent for crop loans upto Rs 50,000 as part of efforts to improve conditions of small farmers.
New Delhi, July 16: Government today nearly halved the interest rate on agriculture credit to a maximum of 9.0 per cent for crop loans upto Rs 50,000 as part of efforts to improve conditions of small farmers.
"Currently, the interest rates on farm loans work out to
as high as 16-18 per cent. Banks have been directed to provide
farm loans upto Rs 50,000 at 9.0 per cent," Finance Minister
Jaswant Singh told reporters here.
He said plans are also afoot to franchise post offices
to disburse loans directly to farmers.
The scheme will be introduced in the state of Tamil Nadu first and then in the rest of the country, stated the minister. State Bank of India, ICICI Bank, Indian Overseas Bank and Indian Bank would start a pilot project on September 1 in Tamil Nadu to disburse farm loans through post offices, Singh said, adding if successful, the franchising would be replicated all over the country through the 1.54 lakh post offices.
"This will be done by the post offices for which they will be paid a fee," he said.
Singh also said the government was planning to amend the NABARD Act to ensure that the nodal agri credit bank is able to give loans directly to district central cooperative banks (DCCBs).
Currently, refinancing of NABARD loans was at 6.5 per cent but the actual interest rate worked out to 16-18 per cent after passing through multi-layers.
Through this mechanism the interest rate on farm loans charged by cooperative banks will come to about 9 per cent, the finance minister said.
With this, government targets to achieve Rs 7,36,510 crore credit flow to the farm sector by the end of tenth five year plan in 2007, from Rs 70,810 crore disbursed during 2002-03.
Observing that interest rates on loans for tractor or other agriculture equipment was much higher than that for the motor cars, Singh said, "A consortium of banks led by SBI has been formed to negotiate with the manufacturers and dealers of tractors and other agri-equipment for the purpose of obtaining maximum possible discounts and concessions".
Bureau Report
The scheme will be introduced in the state of Tamil Nadu first and then in the rest of the country, stated the minister. State Bank of India, ICICI Bank, Indian Overseas Bank and Indian Bank would start a pilot project on September 1 in Tamil Nadu to disburse farm loans through post offices, Singh said, adding if successful, the franchising would be replicated all over the country through the 1.54 lakh post offices.
"This will be done by the post offices for which they will be paid a fee," he said.
Singh also said the government was planning to amend the NABARD Act to ensure that the nodal agri credit bank is able to give loans directly to district central cooperative banks (DCCBs).
Currently, refinancing of NABARD loans was at 6.5 per cent but the actual interest rate worked out to 16-18 per cent after passing through multi-layers.
Through this mechanism the interest rate on farm loans charged by cooperative banks will come to about 9 per cent, the finance minister said.
With this, government targets to achieve Rs 7,36,510 crore credit flow to the farm sector by the end of tenth five year plan in 2007, from Rs 70,810 crore disbursed during 2002-03.
Observing that interest rates on loans for tractor or other agriculture equipment was much higher than that for the motor cars, Singh said, "A consortium of banks led by SBI has been formed to negotiate with the manufacturers and dealers of tractors and other agri-equipment for the purpose of obtaining maximum possible discounts and concessions".
Bureau Report