SBI to loan farmers for buying land
By Uday Chatterjee | 27 Sep 2001
Mumbai: The State Bank of India (SBI) board has cleared a proposal for extending loans to farmers for buying land. SBI has already received the necessary approvals from the RBI and Nabard.
This is the first time in India that such a loan facility will be available. The scheme will be introduced in October this year.
The scheme is aimed at those farmers whose income from agriculture is not sufficient to sustain livelihood. The bank will not run into any risk because the land will be mortgaged to the bank, says SBI chairman Janki Ballabh.
The scheme will be classified under priority sector lending. The maximum loan amount will be Rs 2 lakh and will be extended to only small and marginal farmers. A minimum margin amount of 15 per cent will be required to be brought in by the farmers and the interest on the loan will be at the primary lending rate.
Viability of the proposal will be considered before sanctioning such loans. There are several farmers who own a very small area of land like 0.25 hectors of land, which makes farming unviable. By increasing the farming area it will lead to the economics of scales and thus improves the viability of the project, say SBI officials.
The bank proposes to propagate the scheme through its 6,600-odd rural and semi-urban branches, out of which 427 branches are agricultural development branches.
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