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April 12, 2001
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Money > Business Headlines > Report April 12, 2001 |
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ICICI Bank angles for agri-business with slew of tie-upsGeorge Smith Alexander & Freny Patel ICICI Bank has teamed up with corporates to give loans to farmers under its new area of interest-- agri-business. The idea of the bank is to shore up its priority sector lending in order to meet the Reserve Bank of India stipulated 40 per cent norm. According to ICICI Bank managing director and CEO H N Sinor, "The bank is getting into the agro business in a big way-- largely corporate based and have tied up with corporates. The bank has been able to achieve a priority sector lending of around 38 per cent last year due to the agri-business compared with 25 to 30 per cent the previous years. It is the first time we have come near the 40 per cent target. " ICICI Bank had recently restructured its business into whole sale and retail businesses. In the wholesale business, the bank is focusing on two new areas -- the small and medium enterprises group and agro-business. The bank has been able to establish backward linkages with farmers through these corporates. "The bank aims to capture the cash flows between the corporates and farmers. On the payment of the money by a corporate after procurement of the agri produce, the bank first appropriates the money due to them and the rest is given to the farmer. The bank keeps a trail of the cash flow of the farmer," said Sinor. He said there is a market of Rs 1000 billion of which even if half is taken into consideration then also it is a huge market. "There is an existing market and it is very profitable. It also meets the social obligation of the bank," added Sinor. On the possibility of high NPAs in this form of rural business Sinor said, "It is necessary to look at risks properly and build-in risk mitigation like the probability of defaults. If the portfolio is much more vulnerable it is necessary to build up your risk premium in the product." The bank charges an interest rate of around 14 per cent for these loans. Powered by ALSO READ:
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