Canara Bank Chairman and Managing Director S. Raman in an interview with Business Line says that the initiative of the bank for farmers has evolved over the years. The bank has an array of credit products — short term as well as term loans.Excerpts from the interview:

What initiatives has Canara Bank taken for the farm sector?

The singular initiative on agriculture credit, if we trace it to the history of the bank, is the fact that lending to farmers has always been one of its core business activities. The bank has never considered it merely as a business thrust on it by mandate on the priority sector.

The initiatives of the bank, hence, have evolved over the years, in many innovations in terms of product content, delivery of credit, support infrastructure, enabling services, etc.

The bank’s strategy has changed with the times-in the wake of transition of agriculture since the ‘90s.The bank has set up Agriculture Consultancy Services (ACS) at head office with a team of experts in the field of agriculture. They offer consultancy services to agri -entrepreneurs and complement the business arm of the bank as far as agriculture credit is concerned. The ACS is going strong having handled more than 1000 projects involving an outlay of more than Rs 5,000 crore. The bank has Specialised Agriculture Finance branches which are meant for handling high value and technology intensive agriculture business activities like green house-floriculture, controlled condition-poultry breeding/hatchery line, seed multiplication and processing, agro-processing, etc. It has an array of credit products-short term as well as term loans- that are designed to meet the needs of farm sector from the seed to consumers’table-entire value chain of agriculture. We have identified about 30 potential agri-clusters across India and our expansion strategy will revolve around that. Our core area for this year is value chain financing in agriculture.

What are your disbursement targets for the farm sector?

The bank has been consistently doing well, exceeding the targeted level of credit disbursement to farm sector. The bank had disbursed Rs 27,327 crore to agriculture sector last year (2011-12) and has planned disbursal of Rs 35,000 crore this year.

In the first five months of this year, we have disbursed Rs 11,271 crore, about 22 per cent more than last year’s disbursal during the corresponding period. The target of Rs 9,956 crore had been achieved. But the performance could have been still better but for the monsoon playing truant in many parts of the country and delayed monsoon affecting the farmers’ plans and schedule of sowing. Some of the immediate plans on agriculture disbursement are with regard to promoting term lending, particularly at micro/farm-level, enable all the eligible households in the service villages with Kisan Credit Card facility or general overdraft facility — as a part of financial inclusion plan of the bank, promote allied activity like dairy as a risk mitigant. The bank has extended a preferential (lower) pricing for direct agriculture term loans extended to the farmers (across-the-board reduction by 25 basis points) since May to encourage farmers take up farm level development projects that can result in increase of productivity (like land leveling, construction of farm ponds, and water conservation structures like bunding, drip irrigation, etc). The bank has launched revised Kisan Credit Card Scheme that can meet the requirements of farm households and it is now enabled with debit cards and the convenience of operation at ATMs. The Kisan Rupay debit cards are tested for usage at point of sales — input dealers like fertilizers, seeds, etc. We have also taken up a special dairy scheme at all centres as a tribute to late Dr Kurien and the small dairy loans can be effective risk mitigant to small and marginal farmers.

How well is your staff trained to handle farm lending?

A service industry depends on people, even if operations are mechanised. Of all areas of banking operations, nothing is more dependent on the people, the right type of people, than farm sector. Connecting with the people in rural areas and farming community is essential for dealing with the farming community-one needs to know the nuances of their way of life, culture, practices, limitations, beliefs and social mores.

We have a team of agricultural graduates, not only at operational (branch level) but at various positions in the bank, who have joined the bank as Agriculture Extension Officers. They are well qualified and philosophically well tuned to facilitate banking the right way that the rural community can understand and also capable of relating to the community from the point of inculcating in them the right banking habits. The bank had started with recruitment of agriculture graduates as Agriculture Extension Officers in 1969, and over the decades, the bank has been regularly recruiting graduates in Agriculture, to handle the specialised job of agriculture credit.

Agriculture credit is mainly through our rural and semi-urban branches. We focus on the right type of training to the officers manning these branches — that include subject related training and sessions on attitudinal aspects. We have faculty at our training centres who have a good knowledge and practical hands-on experience in agriculture credit. Counselling of rural/semi-urban branch officials is a continuous process and the bank’s higher echelons take various HR measures to keep the morale of people working in rural areas, and handling mainly agriculture credit. These include postings, promotion, incentive for good performance and the like.

The agricultural credit of the bank is handled by Priority Credit Wing, under a General Manager, who also started the career as an Agriculture Extension Officer. He has an expert team at the head office, which ably assists him to lead the green brigade of the bank and ensure a high level of motivation and awareness of the operational people handling agriculture credit.

How will the bank tackle NPAs arising because of the present drought?

The rising NPAs in farm sector on account of various factors are a cause for concern. However the drought alone cannot be attributed to be the cause of the rising NPA. The relief measures at times of drought, like rescheduling of loans and fresh credit to resume operations do soften the impact of calamities and the problem of accretion to NPAs.

There are situations even when the good times with the monsoons have yielded the bountiful crops but farmers failing to get the commensurate monetary returns in terms of price for farm produce. The issue is supporting farmers with post harvest finance, so that it and facilitates them to avoid distress sale in such situations. Successive droughts /failure of monsoon also do have a ripple effect of accumulated dues (restructured loans) that causes a stress for the farmers for repayment. We review such cases and endeavour to give sufficiently long repayment period so that the returns of the farmers are not too far stretched to service the present dues.

Another aspect, probably the core of this issue is, ensuring the viable relationship between the investment through credit and expected return. The farm credit needs to bridge the investment gaps of the farms that can rightly bridge the gap in productivity. This involves the continuous process of education of the community on judicious use of credit. The bank is trying the credit plus services through our team of Agriculture Extension Officers, Rural Officers, is bringing out a technical journal Farm Digest — an attempt to bring the lab to the land.

The bank also looks forward to support of all development departments in customer education on credit use and repayment culture, since banks do play a crucial support role in all their development Schemes.

Do you have any drought action plan for Karnataka?

The bank has a blue print of action plan in situations when the farmers are affected by natural calamities like drought. The plan envisages conversion of crop loans into term loans, restructuring existing term loans, working capital for resumption of operations. The plan is put into motion the moment the natural calamity occurs. In Karnataka the bank has Lead bank responsibility in eight districts — Bangalore (Urban), Bangalore (Rural), Chikkaballapura, Chitradurga, Kolar, Davangere, Hassan and Shimoga. All our lead banks have swung into action and in other districts, our branches have gone by the decision of the respective lead banks. The bank has been closely working with Syndicate Bank, the SLBC convener of Karnataka in this regard. A total of 142 taluks in Karnataka have been drought affected.

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