Mumbai: Undere severe pressure, State Bank of India today announced the withdrawl of the temporary suspension of new loan applications for agri equipment, passed late last week (See: SBI puts loans for agri mechanisation on hold)
"We regret that our circular has been misunderstood and has given rise to concern," said O P Bhatt, chairman, SBI in a statement in Mumbai. "The circular is withdrawn with immediate effect," he said referring to its circular of Friday, 16 May asking its branches stop suspend disbursals of new tractor loans ue to rising non-payments.
As the bank with the country's largest banking network, SBI has led in priority sector advances with over 18 per cent agricultural advances of over Rs70,000 in disbursements.However, due to a sharp rise in defaults in its tractor and farm equipment loans of over Rs7,000 after the announcement of the farm-loan waiver in the last Union Budget, the bank's management felt constrained to issue the circular of 16 May.
The statement said, "We have pockets in the country where there are large overdues in tractor loans...It is our attempt to sensitise our branches across the country (about rising NPAs)... As and when this happens, the farmer would be eligible (for loans) and the bank would be willing to lend them again for agricultural activities," he said.
He said that the management wanted to sensitise its branches to the need to bring down NPAs, which had risen significantly. He added that the bank wanted to help farmers avail of the Rs 60,000 crore farm loan waiver.
The bank said ib the statement that it planned to scale up its agri-lending by 33 per cent to Rs13,400 crore in 2008-09 and also add around one lakh new villages not covered by banks by 2010, apaprt fro extendong additional credit linkage to two lakh self-help groups across the country this year.