Infrastructure Lending To Cover Farm-related Activities Too

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Mumbai, May 18: In view of the critical importance of the infrastructure sector, it has been proposed to expand the scope of definition of infrastructure lending to include various supporting activities of agriculture.

The policy document has said construction relating to projects involving agro-processing and supply of inputs to agriculture, construction for preservation and storage of processed agro-products, perishable goods such as fruits, vegetables and flowers including testing facilities for quality and construction of educational institutions and hospitals will be included in the infrastructure financing activities.

The RBI policy document has directed the banks to enhance the credit flow to build up storage facilities. Bankers have welcomed the measures by the RBI as they would give a major push to both agricultural activities and infrastructural financing.

“Banks can provide long-term finance with discounted rate to the agricultural infrastructural activities,” said a senior official in Bank of India. “The RBI’s annual policy for 2004-05 has given a fresh thrust to growth and developments with its focus on infrastructure, hospitals, education, agriculture, SMEs an rural development. The focus on long-term financing will help strengthen infrastructure lending,” said State Bank of India chairman, AK Purwar.

“This measure should positively step up the investment activity in the infrastructure sector and directly augment the prospects for credit off-take in new sectors as well,” commented ICICI Bank’s managing director and CEO, KV Kamath.