Upbeat on prospects in rural market, DCB Bank focuses on tractor loans

Private sector lender DCB Bank on Thursday said it is seeing a good business prospects from rural areas and wants to focus on "encouraging" tractor loans demand from the farming community.

The bank is offering customised loans in Chhattisgarh, Karnataka, Andhra Pradesh, Telangana Madhya Pradesh, Maharashtra, Odisha and Rajasthan, which saw a growth in demand last year.

The bank is positive about rural prospects, as evident from sales in Q2 FY21, and is expecting incremental growth in business, DCB Bank said in a release on Thursday.

Citing a recent Crisil report that tractor sales were up by 12 per cent in first half of FY21, the lender said good monsoon and higher crop production generally support farm incomes and this in turn provides a fillip to tractor demand.

Typically, fortunes of the tractor loan business depend on the vagaries of the weather and the harvest season among other macro and micro variables, it said.

"The sale of tractors shows a heartening trend, it has posted positive growth in key markets. The tractor market is expected to remain buoyant in the months to come. Demand for our tractor loans is particularly encouraging from the farming community in states such as Odisha, Maharashtra, Madhya Pradesh and others," said Narendranath Mishra, Bank's Head of Agri and Inclusive Banking.

The lender said it is offering door step services to potential tractor buyers for a speedy loan approval process anda farmer availing of the loan can also customise loan repayments based on his cash flow.

The borrower can plan repayments in advance depending on the use of the asset (tractor, in this case) and agricultural season (when he expects sell the harvested crop and earn a higher income).

This is significant as a farmer's income is variable and moves in tandem with the harvest season. Once the loan is approved, the bank's free SMS service reminds the customer about the due dates for loan repayment.

DCB Bank said small farmers of even one acre land holding can apply for a tractor loan.

The bank also provides tatkal service for customers who offer a higher margin, or the initial down-payment. And the loan is disbursed to the eligible customer within three workings days.

The government's agri initiatives, in particular the direct benefit mechanism, schemes such as Swamitva for property cards, innovative farming solutions and infrastructure building, will continue to boost the farm sector, Mishra said.

"Going forward, DCB Bank will focus on tractor loans in addition to other loan products such as Kisaan Credit Card (KCC) and Gold Loan for semi-urban and rural customers, he said further.