Financial Daily from THE HINDU group of publications
Thursday, May 08, 2003
Financial Daily from THE HINDU group of publications Thursday, May 08, 2003 |
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Money & Banking
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Public Sector Banks Marginal rise in SBI priority sector loans Rukmani Vishwanath
MUMBAI, May 7 STATE Bank of India's priority sector advances during the fiscal year 2002-03 has risen to Rs 43,000 crore as compared to Rs 41,000 crore in the previous year. However, priority sector loans, as a percentage of net bank credit, has slipped marginally to 40 per cent, from 41.53 per cent in the previous year. Bank officials largely ascribe this decline to a large expansion in corporate advances during the year, constituting net bank credit. In an effort to enhance its priority sector lending, SBI has various initiatives in the pipeline. The bank has just launched a new product `Arthias plus' to finance commission agents against their receivables from farmers, through which it expects to disburse at least Rs 500 crore. Arthias, is an institution that serves as commission agents for farmers, and also act as moneylenders by financing the cultivation of the crop. Once the crop is harvested, Arthias buy back the produce from the farmers and engage in the cleaning, sifting and packaging operations, before selling it back into the market. According to Mr M.A. Krishnan, CGM, Development Banking, SBI, the RBI has recently clarified that loans to Arthias can be treated as priority sector advances. The Arthias are very prominent in cash crops, especially in cotton, tobacco etc. They are a very potent force in the north. The plan is that the bank will finance the Arthias against the mortgage of securities and hypothecation of receivables. The maximum quantum of loans available under this scheme would be Rs 25 lakh for an interest rate up to 12 per cent. Besides this, SBI also plans to foray into tourism finance shortly with a product called `Paryaton Plus'. This product is aimed at aiding the tourism sector for the construction of `budget hotels', mini restaurants, amusement parks, transport operators for luxury buses etc. Towards this end, SBI is in the process of tying up with several State tourism corporations. This initiative is a bid to promote small businesses in the tourism sector, according to Mr Krishnan. SBI also plans to give a major thrust to the contract farming business this fiscal and is in the process of tying up deals with major corporates such as Pepsi, Chambal Fertilizers, Nandan Agro Corporation, United Breweries etc. The bank already has tie-ups with Rallis India and Mahindra India Finance for this purpose. According to officials, the bank sees tremendous business potential in agri export zones in the post WTO scenario and has renewed its thrust in this area for the current fiscal.
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