PSBs to miss farm lending target?
State-run banks, for the first time, are likely to miss their agriculture lending targets for the current fiscal year.india Updated: Mar 21, 2012 02:16 IST
State-run banks, for the first time, are likely to miss their agriculture lending targets for the current fiscal year."A few banks may find it difficult to achieve the set targets for the current fiscal," a government official told HT on the condition of anonymity.
The finance ministry, which has sought information and records from banks on the same, is going through a fine toothcomb.
According to guidelines issued by the Reserve Bank of India on lending to the priority sector, banks are required to achieve a target of 18% of the total credit towards agriculture. The finance ministry has also asked banks to show specific reasons for not being able to achieve the set targets.
At present, the banking system covers about 50% of the farmers in the country. The rest are still primarily being catered for by money lenders, with cash-strapped micro financial institutions significantly reducing lending to farmers. Bank chairmen have been directed by the government to frame a mechanism to ensure that the set targets are met.
Finance minister Pranab Mukherjee has, however, substantially increased the agriculture lending target for government banks to R5,75,000 crore for the next fiscal year. “I propose to raise the target for agricultural credit in 2012-13 to R5,75,000 crore. This represents an increase of R1,00,000 crore over the target for the current year,” Mukherjee said in his budget speech.