Retail boom to fuel stepped up farm loans by banks
CAN AGRICULTURE be the next round of interest for Indian banks? A banking report by Emkay Shares & Stocks has indicated that the growing retail revolution can support Indian banks who are looking at newer growth opportunities. Agriculture credit has tripled from Rs 40,000 crore in FY’01 to touch Rs 1.2 lakh crore and is projected to double by the end of the next fiscal.Incidentally while retail is the buzzword in Indian business, penetration in the food and grocery (F&G) segment is low. In terms of expenditure F&G accounts for 40% of the consumer’s wallet followed by personal care, a distant second with 8%. The report also notes that changing legislation in India’s agri-sector is also expected to provide the additional teeth for the growth of this sector. The first of the amendments relate to the Agriculture Produce Marketing Committee(APMC) Act, which now allows farmers sell directly to bulk buyers instead of having to route the transactions through the various APMC yards in the country. The second major change relates to the removal of Agricultural Produce Cess Act, 1940 and the Produce Cess Act, 1966 to remove cess on exports of domestic agricultural produce. Another pointer is that gross non-performing assets(NPAs) of the agri portfolio of Indian banks has dipped from a high 14.9% in FY’01 to touch 6.2% in FY’05. Commenting on the potential, the report notes that the non-agricultural sectors in the rural economy offers enormous growth opportunities. The non-agricultural sectors cover areas like housing, water supply, irrigation, health, transportation.The non-agricultural sector for instance has been growing at a compounded rate of 10% between FY’1994 and FY’2001 against the growth of 3% of the agricultural sector.
For more detail on Retail India visit: http://www.retailindia.tv/
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