Union Finance Minister Pranab Mukherjee on Saturday said loan disbursement to the agriculture sector was likely to exceed the target of Rs.3.75-lakh crore in the current fiscal.
“Agriculture lending, particularly the short-term crop lending, is doing exceedingly well,” Mr. Mukherjee said at a function to mark the 106th anniversary of Corporation Bank here.
“For 2010-11 (current fiscal), I fixed a target of Rs.3,75,000 crore and I am quite confident, because by December I have already reached Rs.3-lakh crore, it will be possible to exceed the target,” he said.
Citing past experience, Mr. Mukherjee said, “when we came to office in May 2004, we decided we would like to double the short-term agricultural credit within three years. At that point of time the total quantum of short term credit was Rs.86,000 crore. We completed it in two years.” The short-term credit target for 2009-10 was Rs.3,25,000 crore, which exceeded to Rs.3,91,000 crore, he said. For 2011-12, the government has fixed a target of Rs.4.75 lakh crore, he said, adding, “I do hope that my friends in the banking community would come of to expectation of the people and poor farmers of this nation.”
In the budget speech presented last month, Mr. Mukherjee had said “to get the best from their land, farmers need access to affordable credit. Banks have been consistently meeting the targets set for agriculture credit flow in the past few years. “For 2011-12, I am raising the target of credit flow to the farmers from Rs.3,75,000 crore this year to Rs.4,75,000 crore. Banks have been asked to step up direct lending for agriculture and credit to small and marginal farmers,” he had said.
Mr. Mukherjee said since 2006-07, the government was also providing interest subvention to all public sector banks (PSBs), Regional Rural Banks (RRBs) and cooperative banks for short-term crop loans up to Rs.3 lakh, so as to ensure that short-term agriculture credit was available at 7 per cent to farmers.
From 2010-11, an additional 2 per cent interest subvention was being provided to those farmers, who repay their short-term crop loans in time, he said. Thus, the short-term crop credit is available to farmers at 5 per cent in 2010-11. In 2011-12, the interest subvention scheme proposed to further incentivise prompt repayment by farmers by providing a further incentive of 3 per cent interest subvention, he said.
On financial inclusion, Mr. Mukherjee said, “One of the biggest challenges before our nation today is to ensure inclusive growth.”
Financial inclusion was an important priority of the government as only 38 per cent (32,919) of the 87,051 bank branches of scheduled commercial banks were in rural areas and only 40 per cent of the country's population had bank accounts, he said. There were about six lakh villages in India, while there were only 32,919 rural bank branches, he added. To address this need, he said, “I had in 2010-11 directed all banks to provide appropriate banking facilities to habitations having population in excess of 2,000 by March, 2012, using various models and technologies including branchless banking, through Business Correspondents (BCs).”
On the occasion of the 106th foundation day of Corporation Bank, Mr. Mukherjee announced the inauguration of the bank's Heritage and Financial Research Centre at Udupi that would house, Numismatic Museum, Notophily Museum and an exclusive section dedicated to contribution of past and present luminaries in the field of Indian banking and finance.