State Bank of India (SBI) is working on a proposal to cut the interest rate on loans given to private entrepreneurs for constructing cold storages across the country. Such loans are disbursed only to projects that have been approved by NHB and are an attempt by the bank to meet its 18% farm loan growth target by the fiscal year-end (FY11).
“A proposal to reduce the interest rate for cold storage scheme to 10% (from 10.9%) is under consideration of the SBI,” said Bijay Kumar, managing director of NHB. “Considering the investment for an optimum size cold store is Rs 3-4 crore, it will be a substantial relief for a prospective investor.”
In order to meet its farm loan growth target, SBI, among other things, last month reduced the card rate on NHB-linked cold storage loans from 12.25-13.75% to 10.9% provided such loans were availed up to the fiscal year-end (Mar 31) The tenure on loans at and above Rs 25 lakh is eight years.
While SBI officials declined to comment on the proposal, the move if finalised by the bank, said to have a Rs 350-400 crore exposure to cold storage projects, will come at a time when food price inflation has entered high double digits and forced the central bank to tighten the rate at which it lends to banks by 25 basis points at Tuesdays credit policy.
The country loses an estimated 30% of the over 200 million tonne of vegetables and fruits it produces annually due to improper storage techniqes. Recently, the price of onions rose to Rs 100 a kg in parts of the country on reports of 20% crop damage due to untimely rains. However, improper post-harvest techniques may have led to further damage of the stored crop, leading the country to banking on imports to meet the shortage. Prices currently hover around Rs 50-55 a kg.
It is also learnt that under the proposal the concessional rate will be available in the initial years of the project with the bank applying the card or on-record rate subsequently. . At present, a client availing of such a loan has to put up a 25% margin with NHB providing a subsidy of 40% and the bank the rest. NHB earlier gave 25% subsidy on the project cost for setting up cold storage facilities. The subsidy component was increased to 40% from May 1, 2010.
“There is no problem of funds for our schemes. Against Rs 16-17 crore that we used to spend for the cold storage scheme, we will get Rs 70 crore from the government this year to meet the subsidy component. We have received 140 applications since May 1, 2010. If the interest rate goes down, the response may become even better,” said Mr Kumar.
“There are about 30 to 40 cold chain proposals from Maharashtra under application stage. The interest rate of most of the banks is 12-13%. A cut in interest rate of 3% will be a major relief for the prospective investors,” said Shrikant Bhutada, Pune-based chartered accountant.
+1.jpg)
0 comments
Post a Comment