The largest lender of the country, State Bank of India is planning to reduce interest rates on loans taken by entrepreneurs to set up cold storage devices in the country, informed a senior official of National Horticulture Board (NHB).
These kinds of loans are given out to only those projects which have received approval from NHB.
"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."
The major motive behind SBI making these endeavors is to achieve the 18% farm loan target given by banking regulator, Reserve Bank of India for this fiscal. The bank recently reduced card rate on cold storage loans approved by NHB rom 12.25-13.75% to 10.9% valid uptil March 31, 2011.
"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.