FinMin calls for more agri credit flow

Alarmed at the prospect of not meeting the annual farm credit target of Rs 2,80,000 crore for 2008-09, the finance ministry has asked banks to undertake special drives to enhance credit flow to agriculture. Finance Minister P Chidambaram will also raise the issue when he meets the chiefs of public sector banks here tomorrow.

Credit flow to agriculture declined by 5.8 per cent to Rs 95,064 crore in April-September this year as compared with Rs 1,01,021 crore in the same period last year.

As against the annual target of Rs 2,80,000 crore for public sector banks, regional rural banks (RRBs) and cooperatives, the lending to farmers stood at Rs 95,064 crore in the first six months of the current financial year. This is 33.95 per cent of the annual target. During the same period in 2007-08, the lenders had met 44.9 per cent of the annual target of Rs 2,25,000 crore.

Considering the slow pace of farm lending, Finance Secretary Arun Ramanathan met executive directors of all public sector banks and National Bank for Agriculture and Rural Development (Nabard), the refinancier to RRBs and cooperatives, to review the status on September 24.

The chiefs of eight public sector banks, with slow progress in agriculture credit, have been asked to improve their lending. Meanwhile, the Department of Financial Services have also issued fresh instructions to all banks and Nabard to expedite agriculture credit flow, sources said.

Out of Rs 1,95,000 crore target for 2008-09, the 28 public sector banks have lent Rs 64,988 crore in April-September. They have achieved 33 per cent of the annual target as compared with 40.5 per cent in the same period last year.

Though absolute amount lent by public sector banks were higher during the period, there is even a decline in the absolute amount lent by RRBs and cooperatives during April-September this year.