NEW DELHI: Agriculture minister Ajit Singh has has been rather cynical about FM Jaswant Singh’s Budget announcement that the prime lending rate (PLR) for agricultural loans would have a 2% band above and below the PLR. 

Contending that there’s a strong possibility that farm loans would be lent 2% above the PLR, Mr Singh said that he would take up the issue of “apparent flexibility in interest rates’’ with the finance ministry. This, even as co-operative banks complained about the government’s move of passing on the ultimate burden of waiving farm sector loans to co-operative banks. The agriculture ministry is now expected to take up the issue of compensating co-operative banks for the financial burden caused by the interest waiver decision. This will be in consultation with Nabard and RBI. The Centre is planning to waive one year’s interest on kharif crop loans in the wake of the recent drought.

In the face of sharp criticism by the co-operative sector on the finance ministry’s interest rate policy for the agricultural sector, Mr Singh admitted at the 56th meeting of the General Council of National Co-operative Development Corporation (NCDC) here that the chances of the announcement being of great benefit to farmers were low. “Rate of interest at which credit is disbursed to the farmers is a very big issue, it is a serious problem. Inputs costs have risen when funds available for the sector are less,” he stressed. Today’s meeting approved assistance to the tune of Rs 735 crore by the NCDC to co-operatives in various sectors during ’03-04. NCDC’s non-performing assets are at a low level of 7.2%, which compares well with other banks and FIs.

During the next financial year, NCDC will extend financial assistance of Rs 356.6 crore to co-ops in the processing sector, Rs 119.6 core to the weaker sections’ co-ops and Rs 105 crore for marketing co-ops.

TIMES NEWS NETWORK[ FRIDAY, MARCH 28, 2003 07:16:34 AM ]