SAS, Canara in tractor finance talks

SAS Motors Ltd, manufacturers of low cost Chinese tractors, is in talks with Canara Bank to help farmers buy the Rs 99,000 tractor on EMI basis under a personal loan scheme.

The tie up, if materialised, will prove to be a major fillip to SAS Motors's effort to sell its low cost tractors to poor and marginal farmers until Nabard refinance is made available. SAS Motors received the clearance under the Central Motor Vehicles Act to sell the tractor only last month.

SAS Motors' executives said the Nabard loan at subsidised interest rate will entail a savings of 2-4 per cent for the farmers. However to avail of Nabard refinance, the tractor has to pass mandatory performance test at Central Farm Machinery Training & Testing Institute (CFMTTI) at Budni in Madhya Pradesh.

Ravindra Kumar, managing director, SAS Motors Ltd refused to confirm the name of the banks the company is in talks with. "Until we get the performance test cleared at Budni, we will help farmers avail of personal loans from commercial banks. The performance test is not mandatory to avail these loans. At this stage, I can only say that several banks have shown interest in this."

Banking sources confirmed that farmers can avail of personal loans to buy tractors that have not undergone performance test.

The interest rate however would be 12-14 per cent and loan tenture will be restricted to 60 months. A tractor loan, which can be given only to performance-tested tractors, will attract only 9.5-10 per cent interest and the tenure of the loan can be as long as nine years.

Kumar explained that a tractor loan of Rs 90,000 at 10 per cent interest and 96 installments would work out to an EMI of Rs 1366 a month. A personal loan that can be availed of for the full value of Rs 99,000 at 14 per cent interest and 96 months tenure will work out to an EMI of Rs 1720.