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Corporation Bank, MCX in farm loan deal

Mumbai, March 31: The Mangalore-based Corporation Bank has tied up with Multi Commodity Exchange of India Ltd (MCX) for an agriculture produce loan scheme to mitigate the potential losses suffered by farmers and expand the scope for extending finance to traders in farm commodities.

The tie-up is expected to present a solution to a crucial problem faced by farmers.

V. K. Chopra, chairman and MD of Corp Bank, said farmers often resort to the sale of the agricultural produce immediately after harvest due to a lack of withholding capacity and the immediate need for ready cash.

The bank would extend loans to farmers and traders against warehouse receipt covering the agri-produce stored in warehouses approved by MCX, he added.

While loans up to Rs 2 lakh would attract an interest rate of 9 per cent, those between Rs 2-20 lakh would attract a 9.50 per cent interest. Farmers would be granted loans of up to 80 per cent of the value of agriculture produce.

Loans are required to be repaid in 12 months from the date of disbursement or the validity of the warehouse receipt, whichever is less, Chopra added.

Chopra said the bank has recorded around 30 per cent growth in advances during 2004-05. Advances stood at Rs 18,000 crore compared with Rs 13,800 crore in 2003-04.

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