Mumbai: Public sector banks are all set to approach the central government to provide more loans to farmers even before their existing loans are settled.
It is learned that the matter will be raised in the meeting of public sector bank representatives called by the Prime Minister in the first week of September. Banks hope that this move will help farmers secure loans during time of natural disasters.
At present, farmers will be granted new loans only after settling the dues of the existing loan. This denies farmers the opportunity to procure loans.
Moreover, implementing credit guaranty scheme for agriculture will help secure more funds for the sector, the banks said. The opinions were formulated in discussions held across branches in this regard.
The meeting is also expected to discuss introducing a common system to ensure cyber security instead of the present system of each bank using its own system. The banks may raise the issue of increasing the loan amount provided for loans based on land documents.
The reduction in market share of public sector banks has increased concerns. It is in this situation that the PM has called for the meeting aimed at enhancing the image of public sector banks. Earlier, farmers had demanded reduction in the system of granting loans based on CIBIL score.
If a natural disaster destroys crops, agricultural loans will become non-paid. This reduces the credit score of farmers. Later his leads to a situation where farmers will not be granted loans. Moreover, a large number of farmers still does not know what credit score is.