Boost for Bengal farm loan

Calcutta: Five districts of Bengal, low on credit offtake, will get a lending boost with the State Bank of India and Nabard jointly teaming up with five NGOs on Tuesday to offer loans to the farm sector.

To implement the scheme, 2,500 joint liability groups will be promoted across the five districts of Burdwan, East Midnapore, West Midnapore, Purulia and North 24 Parganas.

The credit-deposit (CD) ratio in each of the districts is far below the state's aggregate CD ratio (after considering the amount sanctioned outside Bengal but funds utilised in the state and the Rural Infrastructure Development Fund support). As of September 2017, the state's CD ratio was 66 per cent.

Joint liability groups (JLGs) are typically informal groups of 4-10 members who are engaged in similar economic activities and are willing to jointly service loans taken from banks.

Through the memorandum of understanding signed on Tuesday, the SBI and Nabard plan to financially support the JLGs for seasonal crop cultivation, term loan and allied activities in a manner that minimises the risk to the loan portfolio of the SBI.

SBI chief general manager Partha Pratim Sengupta said the three-way tie-up would benefit small, marginal and tenant farmers who are in dire need of credit but are deprived of it because of the difficulty of public sector banks to reach out to them directly.

"We hope that this (model) can be scaled up to cover all districts of the state," Sengupta said.

A.K. Raybarman, chief general manager of Nabard, said such tie-ups would facilitate refinance support to banks apart from extending support towards credit linkage to the JLGs through the five NGOs.

Nabard has, so far, sanctioned assistance for the promotion of 60,000 JLGs in the state through 339 projects in different districts.

According to Raybarman, tenant farmers and share croppers in many parts of the state are often unable to secure institutional credit, disaster relief and other support services due to lack of title to the land.

Scaling up

According to Nabard officials, there are about 24 lakh JLGs across the country. With five to six lakh additions to JLGs expected every year, the share of public sector banks and regional rural banks in financing through JLGs could increase to 50 per cent from around 20 per cent at present.


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