SBM offers lowest rate for crop loans
State Bank of Mysore (SBM), the Bangalore-based associate bank of State Bank of India, today launched a crop loan scheme for farmers, under which it will charge only 2 per cent Interest. This is the first time in the history of Indian banking that a public sector bank is offering such a low rate of interest, a top bank official said.
Launching the scheme here, Dilip Mavinkurve, managing director, SBM said, “Last year was not a good year for our farmers as Karnataka experienced both very dry conditions and floods in quick succession. In order to encourage and motivate farmers to avail of crop loans, we have formulated the scheme called Mysore Bank Prathiphala Yojane to offer the lowest rate of interest on farm loans.”
Chief minister B S Yeddyurappa launched the scheme at a function by distributing loan certificates to selected farmers from across the state.
Under the scheme, SBM will offer an additional interest rebate of 1 per cent per annum for prompt payment on all fresh crop loans availed by farmers in the state. Already, the Centre has announced an interest rebate of 2 per cent for loans upto Rs3 lakh. The state government is providing an interest rebate of 2 per cent on crop loans up to Rs50,000. Put together, farmers availing crop loans up to Rs50,000 from the bank would effectively need to pay a 2 per cent interest per annum and 4 per cent for loans up to Rs3 lakh.
With the launch of the scheme, SBM hopes to disburse an additional Rs1,500 crore under crop loans this year. Presently, SBM’s agriculture advances are about Rs4,200 crore of which Rs1,200 crore is for production credit and Rs3,000 crore is for investment credit. Agriculture finances constitutes 25 per cent of the bank’s advances in Karnataka and priority sector loans including agriculture constitute over 50 per cent in the state.
Mavinkurve said the bank plans to organise credit camps across the state to bring eligible farmers into the books of the bank.
Yeddyurappa said the bank’s efforts were revolutionary in the banking industry and it is worthy of emulation by other nationalised banks. He said, he would call a special meeting of banks in the state and urge them to replicate the SBM model in their banks.