To ensure timely availability of agricultural credit, private banks will be encouraged to open branches in rural areas to service the credit needs of both farm and non-farm sectors.

This will be subject to Reserve Bank of India prudential norms and approvals, Finance Minister Jaswant Singh said presenting the Union Budget for 2003-04 in Parliament on Friday.

Proposal for franchising agricultural credit, including through post offices, would be examined afresh.

In order to pass the benefits of lower rates of interest to agriculture and the Small Scale Industries sector, Indian Bank Association would now advise its members to adopt the SBI (State Bank of India) interest rate band of two per cent above and below its prime lending rate for secured advances.

PTI