Excerpts of a recent interview with Mr. P.P.Thangavelu Senior Manager of Agriculture Finance and Priority Sector Section, Canara Bank, Chennai.
Canara Bank is engaged in the field of agricultural lending. Under direct finance to farmers for agriculture purposes, Canara Bank sanctions short term loans for raising crops in the form of Kisan Credit Card. The term loans are sanctioned for the purchase of agricultural implements and machinery, development of irrigation potential,reclamation and land development, construction of farm-house, buildings,structures, construction and running of storage facilities, production and processing of hybrid seeds of crops, payment of irrigation charges, and development loans for allied activities, fisheries, poultry, bio gas plants to name a few.
Under indirect finance Canara Bank sanctions loans for financing the distribution of fertilizers, pesticides, seeds etc, to construct cold storage structures, hire purchase scheme for distribution of agricultural machinery and implements etc, to build rural go-downs, and to construct/improve marketing infrastructure through agricultural marketing societies.Loans are extended to any activity connected with agriculture, provided the said activity is technically feasible, economically viable and bankable.Generally the applicant has to bring in margin for agricultural loans wherein up to Rs.50000 there is no Margin but over Rs.50000 and up to Rs.2 lakhs the margin between 10% -15%.
[hidepost] The security norms usually cover hypothecation of assets created, mortgage of landed property and co-obligation depending on the loan amount.The rate of interest with effect from 01.01.2005is from 8.25% to 12.75% depending on the nature of loan and amount. The repayment of loans advanced should come from the incremental income generated by the investment for which the loan has been given. In cases where farmers will derive income after a gestation period, there is a grace period (repayment holiday) until the investment/ asset created from the loan generates income.
The Bank also provides agricultural consultancy services at its head office in Bangalore, where various services like project formulation, project appraisal, rehabilitation package for sick units,technical/management consultancy training etc are imparted. Agriculture finance and priority sector section functions are at Chennai.