...... In recent times, the finance ministry has told banks agricultural lending was an issue to be taken seriously, and had come down heavily on banks that missed farm sector lending targets. The ministry also asked banks not to deploy resources in low-yielding assets, like the National Bank of Agricultural and Rural Development’s Rural Infrastructure Development Fund (RIDF). Banks are mandated to lend 18 per cent of their net bank credit to the agricultural sector (with a sub target of 13.5 per cent to direct agriculture). If a bank fails to meet the target, it invests in RIDF bonds. Due to the rise in NPAs, lenders have been cautious in lending to the agricultural sector. The share of agricultural credit to the total outstanding non-food credit declined in 2010-11. According to RBI, as of March 31, 2011, the agricultural sector received only 13 per cent of the total non-food credit.
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