State Bank of India, country’s largest lender has now come with a new scheme for farmers. Bank has revived its scheme under which it will provide irrigation and crop loans to the farmers at cheap rates. The bank aims to help farmers during the upcoming kharif season, and the rabi season later, a bank official pointed out. Earlier bank extended its special home loans scheme till end June 2010.
However SBI has marginally increased its lending rates for the special scheme which was first launched to help farmers hit by weak monsoons and drought conditions last year. This has been done as the bank’s cost of funds that increased in the period. The bank official clarified, that it has kept the rates still lower than normal floating rates loan.
In a released issue, SBI said it will be offering all fresh minor irrigation loans at 8.5% in the first year and 9.5% for the second and third years. These rates will be applicable for loans up to Rs 25 lakh and payable in three years and above. The normal rates will be around 10.50% to 13.25%.
The bank said crop loans will be given for one year on 10% rate for a sum above Rs 3 lakh and up to Rs 25 lakh. If the repayment is done timely then an additional 1% concession will be given, this is being done to encourage, “timely repayment culture.”
The crop loans under Rs 3 lakh will be offered at 7% and the concession for timely repayment here will be 2%, as per the interest subvention scheme of the central government. An anonymous SBI official said, “A combination of minor irrigation and crop finance concessions are required for helping farmers build capacity at this juncture.”
Bank has not changed margin money for new minor irrigation loans it continues at 10% flat from the original levels of 15% to 25% of the project cost. It has extended the moratorium period by one year for minor irrigation loans. The release said the repayment period for new loans has also been extended by one year.
In 2009-10 India’s food grain output is expected to equal last year’s levels in spite of the worst drought in 37 years hitting the summer crop hard, with the bumper winter crop output is expected to make up for the shortfall in the summer production, according to recent ET report.