New Delhi, July 6

With tractor sales dipping, manufacturers are looking increasingly at private sector banks and non-banking finance companies (NBFC) to offer retail financing options.

During 2003-04 to 2006-07, tractor sales nearly doubled, bolstered by the United Progressive Alliance (UPA) Government’s thrust on boosting rural credit. But since last fiscal, there has been a slowdown, which the industry believes has to do with public sector banks turning cagey and adopting more stringent lending norms.

“Availability of credit is crucial for the sector, as over 90 per cent of tractors are bought by farmers against loans, mainly extended by public sector banks,” said Mr Anjanikumar Choudhari, President (Farm Equipment), Mahindra & Mahindra Ltd (M&M). According to him, the surge in rural credit disbursement during 2003-07 could have led to a build-up of non-performing assets, forcing banks to go slow on fresh lending.

Over and above this, the uncertainty over the modalities of the farm loan waiver scheme caused many banks to pull back and “even stop extending credit during April-June”, he added. The result: sales fell by 5.23 per cent during 2007-08 and have remained sluggish in the first quarter of this fiscal as well. All manufacturers, barring Escorts, New Holland and John Deere, saw volumes drop in 2007-08.

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