SBI Chennai circle's credit for agri dips 39%

State Bank of India (SBI) Chennai circle's advances for agriculture and allied activities has dropped by 39 per cent to Rs 69 crore in 2003-04 due to the failure of monsoons during the year.

Speaking to Business Standard, Abhijit Datta, chief general manager of SBI, said: "We would give special thrust to the agriculture sector and expect to disburse about Rs 250 crore during the current fiscal. We have identified projects to advance credit for contract farming, purchase of tractors, minor irrigation, waste land farming, food processing units and cold storage chains in Tamil Nadu and Pondicherry."

Datta said that the bank was planning to enter into an agreement with M S Swaminathan Foundation to identify projects, prepare and finance schemes suitable to the agricultural farmers.

"Three projects were already operational in three districts of the state. The credit facility extended for smaller projects would be around Rs 10 lakh," he said.

"The bank has earmarked Rs 50 crore for contract farming during the current fiscal as compared to Rs 3.54 crore in 2003-04. Though the concept of contract farming was started last year, the scheme did not pick up well due to the drought. The bank received about 2,031 applications last year," Datta said. The circle plans to add 78,000 Kissan Credit Cards this year and support 28,000 self-help groups (SHGs).

SBI had entered into a preferred tie-up arrangement with the Chennai-based Tractors and Farm Equipment Limited (Tafe) for financing tractors in August 2003. So far, the circle has sold 295 tractors.

Under this scheme, a discount of Rs 6,000 is offered upfront at a low interest rate of 11 per cent repayable in nine years.

"The central government has declared the districts of Tamil Nadu as drought-prone. Therefore the failure of credit payment by farmers will not be considered as defaulted accounts. These accounts will not be accounted as non-performing assets (NPAs)," Datta said.

"If the government had not come out with such a policy measure, we would not have been able to scale up the credit to agriculture during the current year," he added.

The circle has 590 branches of which 213 branches are in rural areas, 185 branches are in semi-urban and 192 in metros and urban areas. The Chennai circle expects to garner a total business of Rs 33,000 crore in 2004-05 as compared to Rs 28,000 crore the previous year.