Banks to hike farm credit

MUMBAI, JULY 6 (AGENCIES)

Following the government's recent policy announcement on doubling the flow of credit to the agriculture sector, banks are gearing up for the big challenge.

However, getting banks to give agricultural loans the same importance as given to corporate loans may be no easy task.

With 'Jai Kisan' the slogan in New Delhi, Maharashtra too has taken the cue. Government-controlled banks in Maharashtra have today almost doubled the amount of credit to farmers.

The banks plan to collectively give away Rs 6,750 crore to agriculture and its allied industries of which that they have set aside Rs 4,950 crore to crop loans, which is 42 per cent up from last year's loans.

Bankers say they're keen to protect farmers from local moneylenders even if it means going soft on farmers who can't repay their loans.

The announcement comes at a time when drought, malnutrition and even farmer suicides will be key issues for the coming elections giving the promise of more credit a political edge.

Now the biggest challenge facing all banks is to make fresh investments in agricultural sector and treat it as a commercial activity at par with corporate loans. Experts say it will take some time before its clear whether banks are simply paying lip service to the governments policy.