Government is trying to get cheaper loans for farmers to buy tractors. The government is having talks with Indian Banks’ Association (IBA), the apex banking body to provide loan for this segment. An anonymous senior government official told that the government has formed a special cell, to examine credit flow into this segment. The cell will have officials from the ministry of heavy industries and IBA.
After the approval of this proposal the leading public sector banks will offer cheaper loans for tractors to boost farming which is facing set back due to slow economy. In India nine out of every 10 tractors bought are financed by banks.
He added, “The government is in talks with all leading public sector banks to make sure loans are easily available. A formula can be worked out to lower the interest rate or a special scheme can be put into place”. Even IBA official confirmed that such a proposal was under consideration.
It is expected cheaper loans may come as a big help for tractor manufacturers in the current slow down. Tractor Manufacturers’ Association president LD Mittal informed, “We have been pushing for a special scheme for tractor loans as farmers are being denied credit. Apart from bringing down the interest rates, relaxing the borrowing norms is very important. If the norms are not relaxed, it would be difficult to give a boost to agriculture credit”.
Bankers pointed out loans through this facility might be available at 10%-11% as against the prevailing rate of 14%-15%. In the beginning some banks such as State Bank of India and Punjab National Bank may start the offer.
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