The Hindu Business Line : Karnataka banks see little impact

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Karnataka banks see little impact

— T. Vijaya Kumar

Relief for farmers: Banks may look at re-phasing loans

A.J. Vinayak

Anjana Chandramouly

Mangalore/Bangalore, Sept. 3 Banks in Karnataka have not felt the impact of the drought yet on their agri portfolio. Mr P. Jayarama Bhat, Managing Director and Chief Executive Officer of Karnataka Bank Ltd, told Business Line that Karnataka has not had a major drought this year. Pointing out that nearly 90 per cent of the bank’s rural and semi-urban branches were in this State, he said most of the bank’s agriculture advances were given here.

“Our portfolio is very safe. We don’t have many rural branches outside Karnataka. Except in some north Karnataka districts, other districts received good monsoon in Karnataka,” he said. Agriculture loans amounting to about Rs 1,100 crore constitute about 10 per cent of the bank’s total advances.

Mr J.M. Garg, Chairman and Managing Director of Corporation Bank, said the real situation arising from the drought will be known only after September, as some places are still receiving rainfall which can make up for the shortfall.

The bank will support farmers who are badly impacted, he said. If the farmers are unable to pay, there is provision to re-phase the loan. Moreover, they have to be given fresh loans as droughts are beyond their control, he said.

The bank’s agriculture portfolio stands at around Rs 3,500 crore, he added.

Canara Bank

Canara Bank does not anticipate much of a problem. The bank, in fact, has enjoyed better agricultural loan disbursements during April-July of this fiscal. “Agricultural loan disbursements at Rs 5,000 crore during the April-July months are much better than last year,” Mr Narasa Reddy, General Manager, Priority Credit, told Business Line. Crop loans account for 60 per cent of the bank’s agricultural credit portfolio.

In times of such natural calamities, the guidelines provided by the Reserve Bank of India are very clear, he said. If the district consultative committee decides, then crop loans will be rephased to be repayable in 3-5 years, said Mr Reddy. In the case of term loans, the current year instalment would get rephased. “Once this is done, farmers will not have overdue and will also be entitled for fresh finance,” he added.

If such packages are not extended by the bank, these accounts will become default accounts automatically, said Mr Reddy. “So it is the responsibility of both the farmer and the bank to get it rephased,” he added.

The bank’s crop loans facilitate good concessions to farmers, he said. For crop loans up to Rs 3 lakh, the bank charges an interest rate of 7 per cent, while it gets 3 per cent from the government. Usually these loans are repaid after harvesting and marketing, said Mr Reddy. Term loans, offered for dairy farming, poultry farming, etc — are also picking up.

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