We don't intend to ban tractor loans: SBI

The State Bank of India, or SBI has withdrawn a Circular saying that it will resume lending in tractor loans. 48-hours ago, it had decided to stop lending tractor loans temporarily.

Anup Banerjee, Deputy MD-Rural, SBI said that it is a temporary hold that was drawing such strong reactions. "We are gearing ourselves for the imminent debt waivers scheme and it was and is still our intention to sensitize our entire branch staff and our entire farming community customers, to the benefits of the scheme. So that will not change, it will continue to happen. It was just that the intention got misunderstood and we did not mean to ban tractor loans," Banerjee said.

Excerpts from CNBC-TV18's exclusive interview with Anup Banerjee:

Q: There was a fairly strong argument made by State Bank of India (SBI) that loans in the tractor and mechanized implements segment was as high as 17%, then why the U-turn?

A: Why do you call it a U-turn?

Q: You have withdrawn a Circular saying that you will resume lending in tractor loans - 48-hours ago you had decided to stop lending tractor loans temporarily. What is the reason?

A: We had said that we would put it on temporary hold.

Q: Do you mean that the temporary hold was a design to be as less as 48-hours?

A: Not at all, it is our temporary hold that was drawing such strong reactions. We had taken a business decision to put it on hold and we took an equally good decision to unlock the hold because the reactions are not suiting us.

Q: Why the temporary stay?

A: We are gearing ourselves for the imminent debt waivers scheme and it was and is still our intention to sensitize our entire branch staff and our entire farming community customers, to the benefits of the scheme. So that will not change; it will continue to happen. It was just that the intention got misunderstood and we did not mean to ban tractor loans. It is a requirement in the country and we are not banning the lending as it has been made out in some quarters. We are not slowing down on agricultural credit again as it is made out in some quarters and infact our agricultural credit is at the highest now.

Q: What is the tractor loan number?

A: Our tractor and farm equipment portfolio is Rs 7,000 crore as at the moment against our total agriculture portfolio of about Rs 43,000 crore. We have got 43% in priority sector guidelines. We have got 18 points plus under agricultural segment. We have got huge business going and we have big plans. There is no question of slowdown in any case. 

Q: Is there a danger that the 17% default rate that you’ll reported 48-hours ago in the segment is likely to continue?

A: The default rate in this sub-segment has always been high and we have been working at this for the last couple of years in fact. We have been talking to the tractor industry on how to control this. We have been tightening our internal appraisal systems. So it is actually a continuum of action for the last two-years. This is the time that we saw there is a farm wavier scheme coming and we need to gear up for that. That was all that we tried to do. The hold was not a ban. 

Q: Was the removal of that hold because your dominant shareholder raised objections - the government?

A: No, there was no objection at all from anybody; it was the reaction of the general. The reaction was totally different from what we anticipated. So we took a business decision to put it on hold, then to unhold it and continue with our same intentions in a different way.