Andhra Bank to increase tractor lending

Inks MoU with HMT to finance at least 300 tractors this fiscal

Andhra Bank and HMT Tractors Limited entered into a memorandum of understanding here on Tuesday to increase the bank's tractor lending in Andhra Pradesh under the 'Kisan Bandhu' scheme.

As per the MoU, Andhra Bank would be financing a minimum of 300 HMT tractors with a total outlay of Rs 15 crore during the current fiscal.

However, according to Andhra Bank chairman and managing director, K Ramakrishnan, the number of HMT tractors to be financed by the bank during 2006-07 could be raised to 1,200 as HMT had targeted to sell 1,500 tractors during the year.

On the whole, Andhra bank had targeted to finance 3,000 tractors of various companies to be sold in the state this year.

Addressing the gathering following the signing of the MoU, Ramakrishnan said that tractor financing was an important aspect of the bank's agricultural credit policy and it has tie-up arrangements with leading tractor manufacturing companies including Mahindra & Mahindra, TAFE, Eicher and New Holland. The bank's exposure under this sector was Rs 141.15 crore covering 6,444 units.

He said that the bank's MoU with HMT would enable farmers to purchase tractors with only 15 per cent of down payment. On its part, HMT would give a discount of Rs 4,000 on the invoice price and extend a warranty for one year or 1,000 hours from the date of delivery of the vehicle.

Ramakrishnan also suggested HMT to train unemployed youth in tractor mechanism in its factory so that they would be able to set up tractor repair centres in villages.

The bank would extend loans for establishment of the repair centres. HMT marketing general manager, Balmukund, responded positively to the suggestion.

Andhra Bank executive director, Kalyan Mukherjee, said that tractor sales in Andhra last fiscal increased to 21,850 from 16,615 in the previous year, registering a growth of 10.65 per cent.

HMT's chief of tractor operations, S K Sarma, said that HMT was targeting to sell 1,500 tractors in Andhra this year as against 636 sold last year.