Uncertainty looms over farm credit growth as monsoon delayed

KOLKATA: Dena Bank chairperson and managing director Nupur Mitra expressed concerns over farm credit growth due to the delay in monsoon and absence of irrigation facilities in many parts of the country.

"Everybody is concerned" Ms Mitra said on Monday. "Credit offtake will be affected in areas where no alternate irrigation arrangement is available".

The government has told banks to chase a target of Rs 5.75 lakh crore agriculture credit this fiscal as against FY12's target of Rs 4.75 lakh crore.

A good harvest is still dependent on monsoon in a country where 70% of the population engage themselves in farming. "We need to reduce the dependence," Mitra said in the city at an event organised by Bharat Chamber of Commerce.

In the last two years, banks have doubled farm lending but this was not commensurated with growth farm production. She said that this trend is a reflection of the fact that bank credit is not used for capital formation and buying farm equipment.

Mitra said that conversion of farm land into non-agricultural land poses a serious threat. "Farmers are selling land because they are not getting maximum return from it. The government should ensure that farmers should get adequate economic incentive to remain as farmers."

Another concern for bankers including Mitra is the low credit offtake through Kisan Credit Cards or KCC. "We have given KCC to every household in Gujarat but not even 10% of the targeted disbursement in happening," she said.