Demand for agriculture credit has been relatively slow but steady during the kharif season, despite a weak monsoon. The main demand for agriculture loans by farmers generally precede the monsoon season.
However, what could become a cause for concern is the repayment of the loans. About 60 per cent of the agriculture credit is disbursed during the kharif season. The UPA government had announced a Rs 72,000 crore farm debt waiver package to wipe out all outstandings. The benefit of the package may be offset by a drought like situation.
Public sector banks have to meet an agriculture loan target of Rs 32,500 crore in 2009-10.
“We are keeping a close watch but the pick up in credit has been slow so far due to a very weak monsoon. Banks may not be able to meet the set target in case the situation continues as the disbursement for the Rabi season could be low,” a finance ministry official said.
MD Mallya, chairman and managing director, Bank of Baroda, said the next two weeks would be critical. “In case monsoon picks up in the next couple of weeks, there would be no pressure,” he said, adding that so far demand for credit has not been severely impacted as in certain regions, rainfall has been more or less normal.
JM Garg, CMD, Corporation Bank, said, “Though there are several pockets which have received no or low rainfall, until now disbursement of agriculture credit has been more or less on track, though we would get the full picture by the end of the month.”