NEW DELHI: The government is confident of meeting the increased target for agricultural credit, said Finance Minister Nirmala Sitharaman on Saturday, adding the Centre is closely monitoring disbursement of bank disbursals to the sector. In the Union Budget 2020-21, the government has raised the farm loan disbursal target by 11 per cent to `15 lakh crore for the next fiscal and allocated `1.6 lakh crore to implement various plans in agriculture and allied sectors as it chases the goal of doubling farmers income by 2022. The farm credit target for the current fiscal had been set at `13.5 lakh crore.
“Credit limit has been expanded. I am sure it is based on local ground level requirement. We expect the demand to grow and credit requirements to also meet this demand. I am closely monitoring banks and their extension of credit facilities, particularly to rural areas,” she told reporters after attending the RBI’s central board meeting.
The government has also allocated `75,000 crore for the PM-KISAN scheme for the next fiscal, the same as the budget estimate for the ongoing fiscal year but higher than revised estimate of `54,370 crore. While farm loans normally attract an interest rate of 9 per cent, the government is now providing a 2 per cent interest subsidy to ensure farmers get short-term farm loan of up to `3 lakh at an effective rate of 7 per cent per annum. Sitharaman also responded to queries regarding the planned mega consolidation of public sector banks (PSBs).
While there was no discussion on the matter during Saturday’s meeting, the minister said there was no reason to go back on the plan. “You will hear about it as it when (the notification) comes,” she said. Centre had announced the merger of 10 PSBs into four large banks in August 2019. As part of the plan, United Bank of India and Oriental Bank of Commerce are to be merged with Punjab National Bank from April 1 this year, making the merged entity the second largest PSB.
Similarly, the government has also decided to merge Syndicate Bank with Canara Bank, and Allahabad Bank with Indian Bank. Andhra Bank and Corporation Bank are also to be turned into a single lender through a merger with Union Bank of India.