Date:30/11/2005 URL: http://www.thehindubusinessline.com/2005/11/30/stories/2005113001871900.htm

Back AP mulls subsidy on interest on loans to marginal farmers

Our Bureau

Hyderabad , Nov 29

AFTER offering subsidy on interest on loans given to self-help groups (SHGs), the Andhra Pradesh Government is now considering extending the same facility to the small and marginal farmers.

Announcing this at the 156th SLBC (State Level Bankers' Committee) meeting here on Tuesday the Chief Minister, Dr Y.S. Rajasekhara Reddy, said the Government would consider implementing this in the next two to three years when the financial position of the State improved.

He said that the interest subsidy of three per cent had helped SHGs in repaying their loans.

The Chief Minister said the Government would develop 13 lakh acres of biodiesel plantation in 13 districts. The department was working on a plan to promote pongamia, as it didn't require water to grow. In the next years, the Government would like to take bio-diesel plantation in a total area of 51 lakh acres.

The Chief Minister has agreed to give land free of cost to the banks in setting up rural training institutes in districts. He directed the officials to do the needful in this regard.

For the first time, the banks could achieve the crop loan targets set for the kharif season (2005). As against the target of Rs 8,650 crore, banks disbursed Rs 8,661.35 crore.

Overall, as against the Annual Credit Plan target of Rs 28,600 crore for 2005-06, the banks lent Rs 18,374 crore, achieving 64.24 per cent of the target at the end of October 2005.

Mr K. Rosaiah, Minister for Finance and Health, expressed unhappiness over lower term loan disbursements for agriculture.

Responding to an appeal by the bankers that the Government should help them in recovering loans, the Minister asked them to come out with a specific plan. "We will certainly look into it as recoveries are also of our concern and responsibility," he said.

Mr K. Ramakrishnan, President of SLBC and Chairman and Managing Director of Andhra Bank, said banks in the State had been writing off the small loans, affecting further lending to them. He asked the Government to appoint officers with necessary powers to ensure proper recovery. "This will help small borrowers back access bank credit," he said.

The Andhra Bank Chairman said cluster-based approach for financing SME (small and medium enterprises) would mean reduction of transaction costs and mitigation of risk. "Cluster based financing would be a thrust area," he said and asked the Government to identify and train entrepreneurs to take up schemes under special clusters.

"Banks will provide adequate credit to these entrepreneurs. Each lead bank in a district will consider adoption of at least one such cluster," he assured.

The SLBC President asked the Government to simplify the procedure for mortgaging agricultural land by farmers to encourage them in taking up developmental schemes. It is also necessary to evolve a simplified and legal-free procedure for extending finance to the farmers cultivating temple lands on lease.