HDFC Bank to go Rural

By Vipin Agnihotri

HDFC is chartering an aggressive expansion plan to leave footprints in all districts in the most populous state of the country, Uttar Pradesh in a phased manner. The bank is all set to come up with hub and spoke model to reach out to its prospective rural clients. Neena Singh, executive vice president of the bank pointed this out in an exclusive chat to The India Street.

“At the first stage it will have a full fledged branch (the hub) equipped to deal with the needs of the rural economy. At the next stage (the spokes) are designed to reach out to its clients in the villages across the country,” she said.

“We had an agri meet today to apprise our agri-relationship managers on the ways to milk the catchment areas in Uttar Pradesh and Uttarakhand,” pointed out Neena Singh. A detailed plan aimed at strong rural presence was being chalked out. In this financial year, the bank would be expanding presence in 19 districts in the state, she added.

At the next stage of its rural operation, Singh said, the bank was planning point of sale machines, capable of cash deposits and withdrawals and it was also allowing its clients a limited number of free transactions through ATMs of associated co-operative banks and public sector banks.

"Another step is our decision to take the more demanding route of connecting with clients directly, rather than taking the easier direct sales agent route. Agri extension education camps will be held in districts to increase farmer’s awareness of our products and also of farm equipment, yield efficiency, farm machinery and other inputs of importance for farmers," she said.

It is worth mentioning in this regard that specific rural products have been planned like tractor loans, kisan gold cards and warehouse receipts. HDFC bank’s rural clients would also be given nearly all the urban-centric banking products including savings account, fixed deposits, automobile loans, foreign exchange facilities and loans against gold.

And the rural rich population will get wealth management solutions, mutual fund products and stocks and commodities trading facility by the bank. The bank’s employees will also be trained to offer investment advice to its rural clients.

Who cares about Agriculture Economic Zones in India?

By Vipin Agnihotri

In the run for getting maximum Special Economic Zones (SEZs) sanctioned, the Indian government seems to have lost its sight on the Agriculture Economic Zones (AEZs). It is worth mentioning in this regard that the export figure from 60 AEZs in the past six years stands only at Rs 5316.31 crore against the target of Rs 11821.47 crore.

Such a dismal growth of AEZs in India punctures the UPA government claims over putting the best possible efforts to increase agricultures contribution to gross domestic product (GDP). According to Associated Chamber of Commerce and Industry (ASSOCHAM) report, there is a decline in exports and investment proceeds of over 50 per cent in all the 60 notified AEZs spread across 20 states.

Theoretically speaking, such agriculture zones were notified in 2001 to enhance export and investments in the farm sector. When this correspondent analyzes all the agriculture zones, 54 are performing very poorly.The ASSOCHAM report is of the opinion that these AEZs could attract only Rs 820.08 crore worth of investment against the envisaged investment limit of Rs 1717.95 crore. “54 AEZs have not been able to make any export or investment because of the non cooperation of agencies involved by their promoters. It is true that AEZs are not doing so well. Plenty of them have mot been able to cope with the teething issues. As a matter of fact, it is only six years ago that majority of them were notified. They would pick up in years to come effectively,” pointed out an official in Agriculture Ministry.

Interestingly, Indian government is in receipt of 34 additional proposals for setting up of AEZ in the last two years. Though, the final approval has not yet been granted. If one takes into consideration the latest Government figure, it clearly pinpoints the fact that the agriculture production has plummeted to an all time low to 1.5 per cent. In other word, the production of rice, coarse cereals and oilseeds has dipped by 1.1, 8.3 and 18.2 per cent respectively.

On the other side of the coin, the Central Statistical Organization (CSO) puts the growth in agriculture at 1.5 per cent in gross domestic product against 8.7 per cent during the last corresponding period. Furthermore, in 2007-08 budget, the UPA government has allocated Rs 8558 crore under the plan outlay for agriculture sector as against Rs 7391 crore spent last year to give a boost to the farm sector, widely regarded as the backbone of Indian economy.

There is no doubt that the wrong policies and continuous neglect has made agriculture subservient to other sectors in India, which is very unfortunate. There is stagnation in productivity. The time has come for Indian government to take charge of agriculture. It cannot be left at the mercy of States. The investment on irrigation has to be increased adequately.

Investment in AEZs meant for premium products like Basmati Rice is negligible and Darjeeling tea is zero. Incidentally, India is the leading producer of tea, but has only one zone attributed to tea in Darjeeling. It was approved three year ago but because of lack of consensus between the central and the state government, MoU is still awaited.