India urges lenders to increase farm lending

Indian government seeks support from banks for the growth of the sector.

The government has asked public sector banks to increase lending to the agricultural sector.

Top finance ministry officials on Tuesday met public sector bank chiefs in New Delhi to discuss their performance for the previous financial year.

In addition, banks have submitted their business targets for the current financial year, including loans, margins and profit, among others. The meeting was chaired by S K Sharma, secretary, finance services, ministry of finance.

According to bankers who attended the meeting, the ministry wanted banks to step up direct agricultural lending as it feels banks have the scope to improve their performance on this front.

According to the Trend and Progress report-2010 published by the Reserve Bank of India (RBI), a host of public sector banks as well as private sector banks have failed to lend 18 per cent of their net bank credit to the agriculture sector as mandated by the banking regulator.

Within agricultural lending, banks are supposed to directly lend 13.5 per cent of net bank credit to agricultural activities while 4.5 per cent can be advanced to activities related indirectly to agriculture.

View the full story in Business Standard.