Union Bank of India and Punjab & Sind Bank have considerable exposure to agri sector and the 2 banks plan to consolidate it:
Union Bank of India serves all c at e gori e s of farmers. Some 1,782,319 small and marginal farmers and 256, 974 large f armers benefited by the banks offerings as of March 2018. Its agricultural loans have increased by 4.8% yoy to `474.43 billion in the first quarter of the current FY.
In contrast, Punjab & Sind Bank served 258,525 small, marginal and large farmers till 31 March 2019 and its advances to the sector stood at `117.50 billion (16.22% of Adjusted Net Bank Credit).
SMALL, MARGINAL FARMERS
Sunil Kumar Yadav, AGM at Rural & Agricultural Banking Department (RABD) at the bank, says more than 63% of agri portfolio is for small and marginal farmers as of June 2019. The bank added 165,494 small and marginal farmers and 2299 large farmers during the last FY. The outstanding loans of small & marginal farmers as of 31 March 2019 amount to `307.73 billion and that of large farmers `181.98 billion, adds Yadav.
Fareed Ahmed, ED at Punjab and Sind Bank, says: “Our yoy growth in number of small, marginal and large farmers is 9.11%, 2.5% and -5.93% respectively and growth in total lending to each of these categories of farmers is 19.74%, 5.94% and -6.77% respectively in 2018-19. Our advances to small and marginal farmers stood at `68.25 billion as on 31 March 2019.”
As far as the outstanding loan amounts of farmers are concerned, crop loans top the list for Union Bank of India with `309.57 billion, followed by investment credit `49.76 billion, dairying `9.18 billion, agri infrastructure `8.57 billion and poultry `3.79 billion. The bank has also been offering funds for sericulture, bee-keeping and fisheries, but these are at the bottom of the list of agricultural activities with the outstanding loan amount being `40 million, `90 million and `1.81 billion respectively.
Punjab & Sind Bank offers a flexible KCC limit for marginal farmers in the range of `10,000-50,000 based on the land holding and crops grown including post-harvest warehouse storage related credit needs and other farm expenses, consumption needs, etc. In addition, the bank also offers small term loans for purchase of farm equipment, establishing mini dairy/backyard poultry, etc, without relating it to the value of land. Fareed Ahmed says KCC RuPay cards are being provided to all eligible account holders. The bank also offers crop insurance under the Pradhan Mantri Fasal Bima Yojana (PMFBY).
Again, as part of cross-selling, the bank offers various credit, deposit and micro insurance products to large farmers. “For example,” says Fareed Ahmed, “2032 large farmers have availed housing loans as on 31 March 19.”
Union Bank of India has taken up several digital initiatives for reaching out to unbanked segments and has provided smart banking solutions. Says Yadav: “Recently we have launched ‘Union Samriddhi Kendra’ project under the hub & spoke model to revamp our credit delivery mechanism of rural and semi-urban (RUSU) branches. We have revamped the structure at our RUSU branches through a complete digitized flow of loan proposals under RUSU model with a view to accelerate the credit flows to agri as well as retail & MSME sectors. For better customer experience we are offering near door-step services, and under this, we are providing new age digital channels such as m-PoS and AePS through ‘Union Digi-Cash Points’ and business correspondents.”
The bank has presence on social media platforms like Twitter, Facebook, YouTube, etc. Its internet banking facility, U mobile app, m-passbook app and Union Selfie app are some of the key initiatives as part of the digital India movement.
Punjab & Sind Bank offers SMS banking, USSD, IMPS, UPI, AEPS and other products and payment systems to all farmers. It also educates them about the benefits of these. The bank has online facility for farmers to apply for agriculture loans, SHG loans and locker facility using its‘Apply & Track’ feature. Says Fareed Ahmed: “We are setting up merchant infrastructure at shops in the allocated villages and we are providing them with PoS devices, BHIM Aadhaar Pay, Bharat QR, etc. We have adopted an individual BC model and our BCs provide basic banking services like account opening, deposit / withdrawal and fund transfer (inter-operable), balance enquiry & mini statement, GCC/KCC disbursement, FD/ RD opening, etc.”
TOP 3, BOTTOM 3 STATES
The 3 states that are at the bottom as far as agri financing of Union Bank of India is concerned are Himachal Pradesh (9098 farmers), Chhattisgarh (8451) and Sikkim (5882). And those at the top are Uttar Pradesh (378,430), Maharashtra (151,042) and Madhya Pradesh (127,215).
In the case of Punjab & Sind Bank, the top 3 states where small, marginal and large farmers are being served are Punjab, Uttar Pradesh and Haryana, while Arunachal Pradesh, Goa and Meghalaya are at the bottom.
Slippages in agricultural loans of Union Bank of India during Q1, FY 2020 have been to the tune of `8.91 billion (up from `7.40 billion in the last quarter of the last FY) and gross agri NPAs are `47.24 billion. Agri sectoral NPAs now constitute 9.96%, up from 8.16% a year ago. There had been yoy growth in gross NPAs of small, marginal and large farmers. “Our gross NPAs of agri sector increased from `27.74 billion to `39.94 in the last FY,” concedes Yadav.
Punjab & Sind Bank faced significant growth in NPAs of the agri sector in 201819. Fareed Ahmed says gross NPAs of the bank rose by 39.64% and net NPAs by 35.52% during the financial year.
Union Bank of India has set a target for incremental financing to 35,521 new small and marginal farmers and 21,176 large farmers for FY 2019-20. It has adopted a key strategy to achieve the above target, which Yadav explains: “We have allocated realistic target to our zones and regions. We undertake monthly review through video conferencing. More focus is being given on investment credit, allied agriculture activities, area specific schemes, timely renewal of KCC limits and finding new avenues for financing under agriculture like high-tech agriculture projects, financing to Farmer Producer Organizations (FPOs) etc.”
FINANCIAL LITERACY PLANS
Punjab & Sind Bank has been regularly conducting programs for financial literacy of its farmer customers. It has 17 Financial Literacy Centers (FLCs) at block level in Punjab and Haryana to spread financial literacy among people. A total of 1293 camps have been organized during the 2018-19 by FLC counselors, wherein 62,509 people actively participated and were sensitized about basic banking services, so that they are able to avail banking services according to their requirements.
Fareed Ahmed says the bank will organize workshops/ conduct webinars to educate farmers about its products as part of its strategy of business growth. “We will conduct special agri credit campaigns to boost agricultural lending during crop seasons. We are in the process of developing new products for horticulture crops and animal husbandry. We are also proposing to diversify our present portfolio under agriculture credit,” says Fareed Ahmed.
Fareed Ahmed reveals that the bank is in the process of developing new products for horticulture crops and animal husbandry
Sunil Kumar Yadav says that the bank has revamped the structure at its RUSU branches through a complete digitized flow of loan proposals