Advance more loans to farmers: Chidambaram

MANDYA, AUG. 14. The Union Finance Minister, P. Chidambaram, today suggested that banks expand their retail lending profile to include the agriculture sector.

At press conference after reviewing the loans disbursed by various bank branches in Bangalore Rural and Mandya districts, he said: "It is wrong to assume that farmers are poor borrowers unlike people in industrial and service sectors. Farmers are good borrowers and they have a sense of honour. The loan recovery in the agricultural sector is as good as in the industrial sector." The bank managers should not disburse only housing, car and scooter loans, and there is a need to look at farm loans also, he said.

Wrong impression

It was due to the wrong impression that lending to the agriculture sector was not profitable that there had been an increase in lending to the housing, vehicle and industry sectors. This impression should be wiped out and lending to the farm sector need to be increased, he said.

"The farmers are good clients, farmers are good borrowers, and farmers repay the loans just like anybody else." Some bank branches had already exceeded their lending targets this year to the farming sector, he said and asked the bankers to change their attitude towards the farming community.

He said that the Union Budget had set aside Rs. 1,05,000 crores to provide loans to the agriculture sector.

Rescheduling loans

Mr. Chidambaram, who heard the grievances of the farmers, students and self-help groups at different bank branches, said the Centre issued an order on June 18 directing all nationalised banks and Regional Rural Banks (RRBS) to reschedule the loans of farmers. "The message has gone to all banks. But I am not sure if it has gone to every branch manager. But believe me, August is better than July, September will be better than August and October will be better than September."

Asked what prompted him to undertake field visits to branches in districts, the Union Minister said that it was not enough to sit in Delhi and announce a policy.

"If you sit in Delhi, you will get one kind information, all in reports. I told the MPs to go to their constituencies. And I will travel as much as possible."

He said that soon after Parliament session, the Indian Banks Association would call a meeting of bank directors and chairpersons to review lending to farm and other sectors. He and the Governor of the Reserve Bank India (RBI) would address the meeting. "The meeting will review the progress made up to August. We will hold a review meeting again in February next year," he said.

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