Government Tells Banks to Raise Agriculture Loans
The government wants public sector banks to increase the loans for agriculture sector, with expectations of an above normal monsoon this year. Indian banks are mandated to disburse 18% of their total advances to the sector as agriculture is a priority sector.
Several regions have not received adequate loans, while banks have managed to meet the targets every year. Finance ministry official said, “There have been certain issues on the distribution of loan, there have been complaints from certain quarters that loans were not given to them, this has been raised.”
The banks overlooked the districts in Jammu and Kashmir, northeaster, eastern and central India. The official said, “To address this banks have been given region-wise targets in 2016-17."
As of April 29, 2016 banks in India had disbursed over Rs 9 lakh crore worth of loans to agriculture and allied sectors, an annual growth of 15%. To Kharif crops about 40% of the total agricultural loans are given.
A good monsoon is expected to boost agriculture growth and it is a big component of India’s GDP. Chief economist, State Bank of India, Soumya Kanti Ghosh said “After two droughts and an increase in the agri-loan target, it is critical for banks to ensure timely repayment.”