Union Bank adds Rs 2,500 cr new farm loans in two months

State-run Union Bank of India has seen a rise in demand for farm loans in the last two months and expects the portfolio to grow by around 18 per cent in FY10, a top official said.

The bank has disbursed Rs 2,500 crore new farm loans in the last two months - Rs 1,500 crore from indirect lending and Rs 1,000 crore from direct loans, Union Bank General Manager, Rural and Agri Business L N V Rao said.

"Revival is visible in the demand for farm loans in the last two months. We expect the portfolio to grow by 15-18 per cent in the current fiscal," Rao told PTI.

At present, total agriculture loan outstanding of the Union Bank stands at Rs 15,300 crore, of which Rs 9,200 crore is from the direct lending, Rao said.

The public lender recovered Rs 125 crore of farm loans, which had received relief from government, so far this fiscal and expects to recover another Rs 150 crore worth loans in the remaining part the year, Rao said.

However, due to a weak monsoon, the bank is likely to see a slight rise in its defaults in indirect lending, he said, adding that the non-performing assets in the farm loan portfolio would remain under manageable level and is likely to decline to 2.2 per cent from 2.5 per cent currently.