PSBs LIKELY TO OFFER CHEAPER TRACTOR LOANS

Leading public sector banks are expected to introduce cheaper loans for tractors for ploughing more investment into farm equipment rusting in a slowing economy. Nine out of every 10 tractors bought in India are financed by banks. The government is talking to Indian Banks Association (IBA), the apex banking body, for opening a window for this segment. A senior government official, who did not wished to be named, said the government has formed a special cell, comprising officials from the ministry of heavy industries and IBA, to examine credit flow into this segment. 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, he said. An IBA official also confirmed that such a proposal was under consideration. Cheaper loans may come as manna for tractor manufacturers in the current slow down. 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, said Tractor Manufacturers Association president LD Mittal. Bankers say loans through this facility may be available at 10%-11% compared to the prevailing rate of 14%-15%. Some banks such as State Bank of India and Punjab National Bank may initially introduce the offer.