ICICI Bank is likely to disburse Rs 7,000 crore (Rs 70 billion) as agricultural lending in 2004-05 as against Rs 4,000 crore (Rs 40 billion) in the last fiscal.
"ICICI Bank will meet targets of agri lending this year. The total disbursement is likely to reach Rs 7,000 crore as against Rs 4,000 crore in the last fiscal", the Bank's managing director and chief executive officer K V Kamath said in Mumbai on Tuesday.
Agricultural financing should not be driven by regulatory obligations as agri lending was a profitable proposition, he said at a CII conference on agriculture.
Kamath said agri credit is a mechanism, like any other lending, where a reasonable return can be expected and a dedicated agro group has been set up by ICICI Bank to study the credit delivery system.
"The increased intermediation cost and risks involved are pushing up the cost of agri lending for banks. We need to reduce the number of intermediaries and scale up agriculture insurance products to lower the cost elements of agri credit", he said.
On a query on banks hesitating to finance innovative agricultural projects, he said such projects cannot be financed by debt capital but should be done by way of venture capital.
"The bank is working out options of venture capital and these innovative projects should be fashioned in such a way as to convince venture capital companies," he added.
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