HDFC readies plan to lend against agri land

HDFC has put up a proposal before five or six state governments, including Punjab and Karnataka, to allow mortgage against agriculture property. It is fixing up parameters like fertility of the soil, quality of produce and financial record of farmers for providing loans. If it gets the governmental nod for the proposal, farmers having at least 7 acres of land would be eligible for this scheme. HDFC joint managing director Renu Sud Karnad says, “We have asked for their permission. We are looking at states where the land is more fertile, like in case of Punjab. Around 72% of India lives in rural areas and we see this as a huge potential. With these new initiatives, I think we should be able to fund almost 20% of the rural farmers.” On the other hand, agri experts opine that this will not be of any help to the small and micro farmers as they have very small land holdings. Indian Society of Agriculture Economics president SS Johl said. ”Still I feel, banks should be made to follow some conditions. Like - a house and at least five acre property of the farmer should not be mortgaged by any bank. Rate of interest should be the prime lending rate , in addition to maximum of 4% on it. If the repayment is double the capital borrowed, it should be considered as money paid back to the bank by the borrower. If banks agree to this, the state government should not have any problem in allowing them to mortgage the agriculture property of farmers.”