First Managing Director of SBI to hold a formal degree in agriculture has taken charge as the Managing Director of State Bank of India with effect from January 20, 2020, explains his initiatives and strategies to reach farm sector business ₹3 lakh crore by FY2024, up from the current 2.15 lakh crore.
State Bank India, India’s largest bank, is also the country’s top lender for the agricultural and rural sectors. Through its You Only Need One (YONO) Krishi platform, SBI is using the agri-fintech ecosystem to transform the way agricultural loans are distributed and renewed. Farmers can now renew their Kisan Credit Card (KCC) loans with just a click away on the app, according to Challa Sreenivasulu Setty, Managing director, SBI, who oversees the farm and rural sectors.
Mr. Setty, who has extensive experience in corporate credit and international banking and is the first Managing Director of SBI to hold a formal degree in agriculture has taken charge as the Managing Director of State Bank of India with effect from January 20, 2020, is interested in learning more about the bank’s initiatives and future plans, as the bank aims to grow its farm sector business to ₹3 lakh crore by FY2024, up from the current 2.15 lakh crore.
The current state of the agricultural sector
Across the board, the crops have done well. In FY20-21, demand from both agribusiness and rural areas has been strong. We’ve noticed some impact in rural regions during the second wave. According to preliminary projections, Gross Value Added (GVA)increased by 3.6 percent in FY21, and it is predicted to increase by 3.5-4 percent in FY22. We saw an increase in infections in Q1 FY 22, but rural demand began to ramp up in June-July. We expect rural to farewell this fiscal as well, thanks to a favorable monsoon and efficient rainfall distribution.
In the credit offtake, there is a reflection
The most popular type of credit is KCC loans, which are tracked in terms of disbursements rather than growth. The majority of the crop loans are repaid during the harvest season, and then the cycle repeats itself.
The sale earnings have struck the account in numerous northern states, including Punjab and Haryana, in Q1. The majority of the sale earnings are now going directly to crop loans via the National Agriculture Market (eNAM), Food Corporation of India (FCI), and state agencies. As a result, crop loans grew at a slower pace in Q1. Regardless, the pick-up took place in July. Between April and July, we almost disbursed moreover ₹35,000 crores in crop loans. As a result, it reflects the fact that the farm sector is performing well and that disbursements are moving along at a rapid pace.
A plan to promote rural credit
We presently have a portfolio of ₹2.1 lakh crores and finance the entire value chain, including seed cultivation, seed processing, crop loans, allied sectors such as dairy and fisheries, as well as warehouse and post-harvest financing. We are also the leading lender to self-help groups (SHGs), which adds to additional income in rural areas, whether farm or non-farm.
By shifting the agricultural loan renewal procedure to the YONO Krishi Platform, we’ve begun a technological intervention with crop loans. SmartPhones are no more luxurious devices and Rural India has a high rate of smartphone adoption. It made banking easier for farmers as they can now renew their crop loans without having to go to the branch with just four clicks. The app-based renewal process will alleviate the pressure on my people while simultaneously benefiting farmers.
We’re also working hard to boost investment credit. The majority of farm financing now relies on production credit or crop loans. In the current fiscal year, we will put a lot of emphasis on investment credit. We’ll concentrate on Agri infrastructure finance, which could include small irrigation, farm gate infrastructure, farmer-owned warehouses, mechanization, and so on. Under the Aatmanirbhar program, the government has also established a 1 lakh crore Agri Infra Fund (AIF). So far, we’ve approved loans totaling ₹350 crores under the AIF. We have a current investment credit exposure of ₹10,000 crores, which we aim to quadruple.
We also believe that increasing financing for SHGs has a lot of promise. We’ve developed a Stree Shakti scheme to support individual SHG members who want to start their own businesses. We’ve started a number of initiatives that will help us grow our portfolio, which is now valued at roughly ₹2.1 lakh crore. In agribusiness, our goal is to hit the ₹3 lakh crore mark by 2024.