A recent press report said that5 with the growing interest rates adding pressure on consumer, auto and housing loans, the Rajkot bank has considered to reduce interest rates to as low as 2 per cent on agricultural advances to be offered in the next financial year.
Reports said that the Rajkot District Cooperative Bank (RDC) has been reducing interest rates on farm loans by 1 per cent each year for the last few years, which is unique in the Indian banking industry.
Mr. C.N. Tarpara, General Manager of the bank said that the shareholders’ had approved the management’s proposal to reduce the rate to 2 per cent, and the final decision will be taken at the bank’s Board meeting that is to be held shortly.
He added saying that the bank had advanced farm loans at a 4 per cent interest rate in the financial year 2010-11, which was further reduced to 3 per cent in the current financial year, 2011-12. He said that the bank would reduce the rates further to just 2 per cent, if approved by the board.
He also said that the reduction of 1 per cent in interest rate, would reduce the bank’s profits by about Rs 10 crore, but the number of beneficiaries and their income goes up, Mr Tarpara said.
RDC had Rs 1,800 crore deposits and advances worth Rs 1,650 crore, including farm loan for about Rs 1,100 crore as of March 31, 2011.