Agriculture credit disbursement up

Updated: Feb 29 2008, 05:46am hrs
The Economic Survey 2007-08 has outlined the increasing exposure of the scheduled commercial banks (SCBs) to the agriculture and rural sector. The Survey also shows the declining non-performing assets (NPA) for the SCBs.

Up to November 2007, the flow of credit to agriculture from the scheduled banking sector was Rs 1,37,760 crore, about 61% of the annual target.

Encouraged by the achievement, Budget 2007-08 set a higher target of Rs 225,000 crore for disbursement of credit and further addition of 5 million new farmers as borrowers to the banking system, to improve credit flow to the agriculture sector, the government initiated a number of policy measures from time to time such as farm credit package and special agriculture credit plans.

In Budget 2006-07, finance minister P Chidambaram urged the banks (including cooperative banks and RRBs) to disburse Rs 1,75,000 crore as credit to agriculture sector during 2006-07. The overall achievement during 2006-07 was Rs 2,03,296 crore. Also, new farmers covered under the institutional credit system were 8.35 million against the target of 5 million.

During 2006-07, the total number of Kisan Credit Cards (KCC) issued were 85,11 lakh and the amount sanctioned was Rs 46,729 crore. As per the available information for 2007-08 (as on November 2007) the amount sanctioned was Rs 25,263 crore.

Also, the KCC scheme has now been extended to borrowers of the long-term cooperative credit structure, thus paving the way for the acceptance of KCCs as a single window for a comprehensive credit product.

To further give a fillip to the scheme, Nabard advised all RRBs to achieve the targets of issuing at least 150 KCCs by each branch during 2007-08. Since inception of the scheme, the banking system has issued 707.55 lakh KCCs up to November 30 2007.

With the renewed emphasis on increasing credit flow to the agriculture sector, Nabard advised cooperative banks and RRBs to identify and cover all farmers, including defaulters, oral lessees, tenant farmers, sharecroppers and others, who might have been left outside the KCC fold, as also new farmers so that all are covered under the scheme by March 2007.

The Survey also said a total of 498 banks (50 commercial banks, 96 amalgamated RRBs and 352 cooperative banks) are actively participating in micro-finance programmes.

As on December 2007, 30.51 lakh self-help groups (SHGs) availed bank loans of Rs 20,114 crore. The average bank loan availed of per SHG and per family amounted to Rs 65,924 and Rs 4,078, respectively.

The programme has enabled an estimated 427 lakh poor households to gain access to micro-finance from the formal banking system.

SCBs NPAs fall

With the availability of number of legal options for recovery of bad loans for the financial sector, the gross non-performing assets of scheduled commercial banks as proportion total assets declined to 1.5 % during 2006-07 from 1.8 % during 2005-06.

The amount recovered and written off (Rs 26,243 crore) was more than the fresh addition (Rs 26, 211 crore) of NPAs during the year. The gross NPAs of SCBs, which had declined by Rs 8,276 crore in 2005-06, declined further by Rs 611 crore in 2006-07.

During 2006-07, the largest number of cases for NPAs recoveries were referred to the lok adalats (1,60,368) followed by the Sarfaesi Act (60,178) and the Debt Recovery Tribunals (4,028). In terms of amounts, the largest amount of Rs 3,749 crore (out of the Rs 9,058)) was recovered under Sarfaesi Act followed by Rs 3,463 crore (out of Rs 9,156 crore) under the DRT.