FM asks PSBs to boost farm credit for pulses, oilseeds, cut imports | Economy & Policy News

Finance Minister Nirmala Sitharaman on Tuesday asked public sector banks (PSBs) to substantially expand credit to farmers growing pulses and oilseeds as part of efforts to reduce India’s import dependence and promote crop diversification.

 

Banks needed to translate the government’s focus on agriculture and food production into “appropriately designed and targeted” financing, Sitharaman said at the closing session of the two-day brainstorming session, PSB Confluence, organised by the Department of Financial Services (DFS), with heads of state-owned banks and public financial institutions (PFIs).

 

“In particular, they must substantially expand credit to farmers growing pulses and oilseeds, which will reduce India’s dependence on imports and help improve soil health and bring Atmanirbharta,” Sitharaman said.

 
 

Lowering India’s import dependence on pulses and oilseeds has been on the government’s recent agenda. Sitharaman had announced the Pulses Mission in the Budget for 2025-26 (FY26) to scale domestic production of the crops to 350 lakh tonnes and expand the cultivation area to 310 lakh hectares by FY31 to achieve self-sufficiency. India’s pulses and oilseed imports fell around 35 per cent to $3.65 billion in FY26.

 

Sitharaman suggested that banks align their lending push with the Prime Minister Dhan-Dhaanya Krishi Yojana, particularly in districts covered under the scheme. Banks should improve the availability of both short-term and long-term credit in these districts to raise productivity, promote crop diversification and sustainable agriculture, and expand irrigation, post-harvest storage and allied infrastructure, she said.

 

The finance minister also asked bankers to ramp up their efforts towards meeting their targets under priority sector lending (PSL). “I have reviewed more than three times the priority sector lending shortfall. I don’t need to get the shortfall back again for me to re-pool through NABARD or SIDBI or HUDCO. Why is it that you (banks) don’t want to do it yourself?” Sitharaman said. “Banks can push even more.”

 

Sitharaman said the success of PSL should no longer be assessed merely through numerical targets but by whether credit is timely, adequate and productive. “PSL should be seen as an opportunity to deepen formal credit, expand the customer base, create stronger enterprises, and support broad-based economic growth,” she said.

 

She told banks to incorporate climate resilience in agricultural lending by developing credit products that encourage high-yielding and climate-resilient varieties, chemical-free farming practices, water conservation and micro-irrigation, including drip and sprinkler systems.

 

“Credit products must therefore reflect the crops, climate, water availability and production conditions of each area,” Sitharaman said, adding that the DFS should monitor banks’ priority sector lending (PSL) and agricultural credit at a granular level.

 

Banking For Youth

 

The finance minister also asked PSBs to launch a focused month-long “Banking for Youth” campaign from October 2, targeting young citizens above 16 years of age. The campaign could be coordinated by the DFS and Indian Banks’ Association (IBA), she said.

 

Banks could take the campaign to colleges, universities and skill-building institutions through account-opening initiatives and financial-awareness programmes. Sitharaman also suggested dedicated “Yuva Kiosks” or “Yuva Banking Mitra” at branches to help young customers navigate banking and credit products.

 

The IBA could also explore a web- and mobile-friendly portal providing young people with information on KYC, banking, credit, entrepreneurship, education and skilling, she said. The portal could also direct users to nearby PSB branches to open basic savings bank deposit accounts.

 

“Pardon me, but public sector banks still give the impression of government banks. Private banks are a lot more attractive. They reach out to the youth, interact with them,” the minister said.

 

Sitharaman said the youth campaign should be viewed as the beginning of a long-term banking relationship, rather than a one-time account-opening exercise. She asked PSBs to build relationships with customers across their financial life cycle, from education and employment to entrepreneurship, home ownership, investment and wealth creation.

 

The finance minister said PSBs, which now operate from a position of “considerably greater strength”, should move from scale to greater competitiveness and leadership by identifying areas where individual banks have distinctive strengths.