Mumbai-based DCB Bank, a private sector scheduled commercial bank, has recently started lending to Farmer Producer Organisations (FPOs) besides offering diversified products in the agriculture sector, its retail and agri loans head Narendranath Mishra has said.
“Agri lending is an interesting business proposition for the bank and DCB Bank has been present in this segment for over two decades. The bank has got diversified products in agriculture lending to suit the needs of customers,” he told businessline in an email interaction.
Narendranath Mishra, Head – Retail and Agri Loans, DCB Bank
The products include tractor and farm equipment loans, Kisan Credit Card, microfinance loans through business correspondents, on-lending through microfinance institutions and non-banking finance companies (NBFCs), and gold loans to farmers.
Specific focus
DCB Bank encourages women farmers to borrow in all agri-lending programmes, he said. It primarily funds women farmers, who cultivate crops or are engaged in dairy, poultry or other allied ascites in agriculture, through microfinance loans via business correspondents.
Mishra said DCB Bank specifically focuses on agri-lending. The bank has a specialised vertical for Kisan Credit Card, tractor loan and microfinance. “The bank provides loans to both agriculture and allied sectors such as dairy, fishery and poultry,” he said.
DCB Bank is meeting the Reserve Bank of India guidelines of lending a minimum of 18 per cent for agricultural purposes.
Rising loan demand
Mishra said agricultural loan demand has been rising steadily. “Implementation of hi-tech farming, mechanisation in farms, increase in the cost of inputs, diversification to allied sectors in agriculture are main reasons for the increase in credit requirement of farmers,” he said.
DCB Bank provides insurance for all notified crops under Prime Minister Fasal Bima Yojana (PMFBY). It is spreading awareness among farmers by informing them about the PMFBY scheme details through SMSes and encouraging them to avail of the insurance coverage. It also facilitates crop insurance settlement claims from insurance companies, said the bank’s retail and agri loans head.
On repayment of loans by farmers on time, Mishra said it depends on the seasonality of crops, timely marketing and receipt of payment of produce. It varies across States depending on crops.
DCB Bank has finetuned repayment dates State-wise and does more than mere banking or lending. “For example, much effort and thought also goes into communication with customers, to encourage positive banking behaviour and prudence. DCB Bank provides educational videos on loans and the importance of timely repayment,” he said.
Delinquency stable
The bank has a dedicated multi-lingual customer care team that helps with timely loan repayment reminders, while the field team follows up in person. “Agri loan delinquency has been largely stable except microfinance segment,” the bank’s retail and agri loan head.
Mishra said defaults in agricultural lending often stem from crop failure, inadequate monsoon, price volatility and lack of financial literacy among farmers. “The bank focuses on continuous credit monitoring, frequent farmer interaction and educating farmers about the importance of regular repayment to ensure good quality portfolio,” Mishra said.
