SBI working on special farm loan scheme

India’s largest lender State Bank of India (SBI) is firming up a special scheme to meet credit needs of farmers, especially those in regions hit by delayed monsoon and drought-like conditions.

A senior SBI official said, “Many agro-climatic regions have seen scanty rain and farmers are hit hard by drought. It is a tough situation due to limited cash flows to farming and other sectors. The scheme aims to provide credit for operations during part of the kharif season and the ensuing rabi season.”

The scheme will cover the whole country. There could be area-specific plans or components to address concerns of regions. The proposed scheme would be over and above any instructions that Reserve Bank of India’s may give to banks to deal with situation in regions hit by natural calamity.

SBI’s farm portfolio at end of June 2009 stood at Rs 55,133 crore compared with Rs 42,426 crore a year ago.

Earlier in February, the country’s largest bank had offered loans to farmers against cold storage and warehouse receipts at 8 per cent for one year. This facility, which was offered until May, was later extended until September.

Crops have been hit by drought in several districts of the country. According to latest data, rainfall is now 25 per cent below normal, compared with 32 per cent deficiency in June.

Of the 36 meteorological subdivisions, cumulative rainfall during June 1-August 26 has been excess or normal in 13 subdivisions, and deficient-to-scanty in over 23. Poor monsoon has severely hit sowing of kharif crops such as rice, oilseeds and coarse cereals.