Agriculture & Industry Survey spoke to Mr. Venkateshwara Rao, chief manager- priority sector, to learn more about the Bank’s foray into the agriculture sector.
Andhra Bank has forayed into the agriculture sector with a number of schemes. Agriculture & Industry Survey spoke to Mr. Venkateshwara Rao, chief manager- priority sector, to learn more about the Bank’s foray into the agriculture sector. The various aspects of agriculture that the Andra Bank is dealing with presently are short term production credit for raising of crops, working capital requirements to pisiculture and poultry farming; investment credit to medium and long term loans to creation of income generating assets like farm mechanization, godowns, livestock, minor irrigation schemes, plantation and horticulture etc; formulation of bankable schemes; conducting farmers meets in both kharif and rabi season to educate the farmers on various banking schemes; conducting training programs to farmers through our rural development institutes; formation of rythu mithra groups with the assistance of state agricultural department; and formation of farmers clubs with the help of NABARD, beside others. The bank is headquartered in Hyderabad and is most active in the states of Andhra Pradesh and Orissa.
According to Mr. Rao, the main challenges the agriculture sector faces at present are:
· Vagaries of the monsoon
· Non availability of in puts
· Poor quality of inputs like seeds, fertilizers and pesticides
· Untimely and in adequate credit.
· Labour scarcity
· Non – mechanized agricultural operations.
· Technology not suiting the needs of the farmers.
· Lack of extension work from the Agriculture Department
· No competitive price for the produce
· Lack of adequate marketing arrangements
· Lack of storage facilities
When asked if the bank helps in conducting researches for improving the agricultural systems that are followed in India today, Mr. Rao avers, “There is no research wing in the bank. We extend the help in extending finance to the schemes carved out of the new and proven results of the research work.”
Schemes for Agriculture Sector
The main schemes the Andra Bank is adopting to help the agriculture sector are the following: · Pattabhi Agri card- short term production credit requirements · AB Kisan Vikas Card- short term production credit requirements with ATM compatibility · Kisan Green Card –Both for short term production and investment credit requirements · Agricultural Gold Loans: both for production and investment credit against the pledge of gold jewels.
· Poultry – term loans for establishment of poultry unit and also for working capital requirements of the existing units.
· Fisheries: terms loans for digging of fish ponds and working capital requirements of already existing tanks. · Minor Irrigation: for digging of wells, tube well and installation of oil engines and electrical pump sets. · Farm Mechanization: To provide finance to tractors, combined harvesters, power tillers, sprayers and other farm equipment · Horticulture and plantations: to establish plantation and horticulture crops and also to provide working capital requirements of the existing gardens. · Sericulture : for rearing of silk worms · Dairy : for the purchase of live stock · Sheep and Goat rearing : for the purchase of livestock · Kisan Samraksha: finance to construct Rural Godowns. · Kisan Chakra : 2 wheeler and four wheeler loans to farmers · Land purchase: for the purchase of agricultural land exclusively for small and marginal farmers. · Debt swapping: to swap the debt of the farmer and women members of SHGs from non institutional lenders.
· Kisan Vivek-Finance to agricultural graduates for self employment ventures and also for extension work · Kisan Sampathi: Agricultural produce loans against the pledge of produce to avoid distress sale from farmers. · Cold storages: for establishment of cold storages. · Loans for dairy agents: for procurement milk from the milk producers · Rythu mithra and Joint Liability Groups : Micro finance to small, marginal and tenant farmers.
The bank has also taken up innovative projects like contract farming and extended financial assistance to these projects. Mr. Rao maintains that the bank has also extended the benefits of technology driven banking practices to the rural areas by setting up ATMs.
The rate of interest for farm loans that the bank extends varies from scheme to scheme. ”Generally for short term credit it ranges from 7.00 % p.a to 13.00% p.a and for term credit it ranges from 10% p.a to 15.75% p.a depending up on type of project, risks involved, constitution of the borrower etc,” avers Mr. Rao.
Further speaking about the collateral securities required for lending to the agriculture sector, Mr.Rao says, “For credit limits of up to Rs.1 lakh there is no need to provide any collateral security. For the credit limits of above Rs.1lakh mortgage of agricultural lands is accepted as collateral security. However, to encourage certain special schemes up to a specified limit, bank is not insisting for any collateral security.”
Lending to Agriculture Sector
Mr.Rao maintains that the bank gives equal preference to all categories of borrowers without any discrimination in terms of big corporate or small farmers. “Most of our agricultural schemes are designed keeping in view of the genuine credit requirements of small and marginal farmers,” he adds.
Some of the prominent agriculture projects the company financed are the following:
a. Debt swapping scheme for farmers known as Kisan Rakshak b. Debt swapping scheme for women groups – Mahila swobhagya c. Kisan green card scheme- to meet both production credit and investment credit requirements of the farmer d. AB Kisan Vikas card to have ATM compatibility to farmers to draw production credit requirements. e. Kisan Chakra – vehicle loan to provide mobility to the farmers f. Dairy agent scheme – loans to milk procurers. g. Andhra Bank Rural Credit Cards.
When asked about the recovery percentage and how the bank deals with defaulters, Mr. Rao maintains, “Recovery percentage is around 80%. In case of default, the bank will examine the reasons for default on case-to-case basis and initiate suitable measures. If the default is beyond the control of the farmer, bank will rephase/restrucutre the existing loans and provide need based finance to overcome the situation. In case of willful default, the bank will initiate legal action to recover the dues. Our NPA % in agricultural sector is 0.30%.”
Schemes for Natural Calamities
Mr. Rao maintains that in the case of natural calamities, the Bank follows all the guidelines issued by RBI for handling natural calamities. :
a.Banks will convert the existing production credit loans in to Term loans repayable in 3-5 years with initial moratorium of one year.
b.Consumption loans are provided
c. Timely fresh financial assistance to resume the productive activities.
d. Existing term loans are restructured. e. Apart from rescheduling the existing term loans banks will provide to affected farmers diverse type of term loans for developmental purposes such as minor irrigation, bullocks, milch cattle, poultry, piggery, fishers etc.
f. During the time of natural calamities, for extending additional finance, bank is flexible as to guarantee, security, margin etc.
Measures for Growth in Agriculture Sector
The bank has taken the following measures to grab opportunities in the agriculture sector that has given good returns:
· Recruited Rural Development Officers directly from colleges and posted to rural areas for development of agricultural business. · Identified potential rural branches and designated as Agri Business centers with enhanced discretionary powers. · Specialized agricultural finance branches in the bank are taking up big projects. · New big projects are taking up under multiple/consortium arrangements.
· MOUs entered with reputed tractor manufactures and vehicle dealers to source the good applications for extending finance to farm mechanization and vehicle loans to farmers. · Relaxation of certain guidelines in specific thrust areas to make the schemes farmer friendly. · Taking assistance of state agricultural department for identification of un covered farmers in rural areas. Commenting on the steps the banking sector can initiate so that more people come forward to take up agriculture as their profession, Mr. Rao avers, “The banking sector alone cannot change the scenario of agriculture. Banking sector can provide finance and prepare certain innovative schemes. Majority of the bottlenecks requires attention of various governmental agencies.”
Direct finance to Agri Category of the farmers Amount in crores
Indirect Finance to Agri. 820
“Our priority sector advances of March 2009, constituting 43.28 % as against 40% prescribed by RBI. We have surpassed the national goal of lending to agriculture sector,” avers Mr. Rao.
Position as on March 2009.
PRIORITY SECTOR ADVANCES Number of accounts Outstanding
Agriculture 1187468 6833.84
Housing Finance 91070 2810.33
Educational Loans 75689 1390.83
Small Enterprises 85937 3341.10
Retail Trade 81712 323.85
Micro credit 49423 255.47
TOTAL 15,71,299 14,955.42
Source : Agriculture & Industry Survey[/hidepost]