ICICI Bank to push agricultural lending
By Our Banking Bureau | 08 Jul 2002
ICICI Bank had, on an experimental basis in Indore, worked with Rallis and HLL. ICICI Bank chief general manager P H Ravi Kumar says: "Rallis provided seeds, pesticides, fertilisers and other inputs, while HLL took over the wheat produce. The experiment, which had started off in 250 acres two years back, is now spread over 7,000 acres in one location itself."
From 5 per cent of the wheat produce for its total requirement, which HLL outsourced from these farms some years back, the outsourcing has now grown to 12 per cent. Also, 30 per cent of its rice requirement will be outsourced to these farms by the corporates.
The limit sanctioned by the bank for only wheat and rice farming this season was at around Rs 35 crore. The bank is also getting into collaboration with companies to produce cotton.
The total area of contract farming is spread over six to eight locations across India. "The bank is planning to finance contract farming across the country so that the systemic risks of being only in a particular area and a single crop are mitigated. The bank is tapping both corporates and non-government organisations for this contract-farming model. The opportunities are identified first and then the bank works backwards with them," says Kumar.
ICICI Bank is also looking at lending to plantation, dairy and seed companies among others through the contract-farming model to help it achieve the Rs 2,000 crore to 2,500 crore of credit off-take this fiscal.
