Sources say the panel's recommendations will have far-reaching implications on agricultural lending in the country. "The report contains significant observations about the centre's subsidy policy. It will also go a long way in changing the concept of priority-sector lending," a senior banker who had made a presentation before the Gupta panel said.

Reserve Bank governor Bimal Jalan had instituted the committee in December last year. The brief of the committee included augmentation of funds flow to the agricultural sector, improvement in credit delivery and simplification of procedures for farm credit.

Gupta, former RBI deputy governor and special secretary banking, made extensive tours in the rural parts of the country over the last few months identifying the bottlenecks in agricultural credit delivery system in various states.

Most of the public-sector banks have alsomade presentations before the committee.

"The panel is in favour of doing away with excessive paperwork. It is believed to have recommended channelling farm subsidies through the banks directly instead of other intermediaries," a public-sector bank chairman said.

The committee also feels the task of identifying the beneficiaries of directed credit should be left to the banks and not other agencies, another banker said.

It is also believed to have made significant recommendations about the non-performing assets (NPA) management in the farm sector. At present, a major chunk of banks' bad loans is locked up in the agriculural sector.

Provision of adequate and timely institutional credit for the rural sector has been a major policy concern of the Reserve Bank of India. Towards this end, the refinancing capacity of the National Bank for Agriculture and Rural Development (Nabard) was enhances with the increase in the general line of credit limit from the RBI from Rs 5,250 crore to Rs 5,500 crore in 1996-97and Rs 5,700 crore last year. The line of credit is for short term and seasonal agricultural operations. The share capital of Nabard has also been enhanced from Rs 500 crore to Rs 1,500 crore, taking the Reserve Bank's total contributions Rs 1,050 crore.

In view of the imperfections in the credit market and the imperative need for funding agriculture, small scale industry and small business and the poverty alleviation programmes, the RBI has not yet done away with the prescription of 40 per cent of net bank credit to the priority sector as well as two concessional rates of interest -- up to Rs 25,000 and Rs 2 lakh. "The Gupta panel, however, feels funds should be available to the farm sector at commercial rates.

The availability of credit is more important than the cost of credit. The focus should be on faster credit delivery," one banker pointed out.

Ratnakar Bank has posted a 25.68 per cent growth in deposits in the financial year 1997-98. The deposits on March 31, 1998 was at Rs 274.06 crore asagainst Rs 218.02 crore on March 31, 1997. The advances registered a 22.80 per cent rise to Rs 159.29 crore in the previous financial year. According a press release issued by the bank, the operating profit of the bank during the year 1997-98 went up by 100 per cent.