Lok Sabha Question No. 3940 (UNSTARRED), answered on 2018-08-10
Subject: Crop/Farm Loans
Ministry: FINANCE
Asked by: JANARDAN SINGH SIGRIWAL

## Government of India Ministry of Finance Department of Financial Services LOK SABHA

Unstarred Question No. 3940

To be answered on Friday, August 10, 2018/Shravana 19, 1940 (Saka)

## Crop/Farm Loans

3940. SHRI JANARDAN SINGH SIGRIWAL:

Will the Minister of FINANCE be pleased to state:

- (a)  whether the Government proposes to grant/extend loans to poor farmers specially belonging to Scheduled  Castes,  Scheduled  Tribes  and  Other  Backward  Classes  at  low  interest  rates  through nationalized and co-operative banks;
- (b) if so, the details thereof, if not, the reasons therefor;
- (c) whether the various Banks in the country are charging higher interest rates on farm loan granted for tractors and other agricultural equipments purchased for agricultural works as compared to interest rates charged on vehicles like car and motorcycles;
- (d) if so, the details thereof; and
- (e) the measures being taken by the Government to grant agriculture loans at reasonable rates in the interest of farmers?

## Answer

The Minister of State in the Ministry of Finance (Shri Shiv Pratap Shukla )

(a) to (e): With a view to ensure availability of agriculture credit at a reduced interest rate of 7% p.a. to the  farmers,  the  Government  of  India  in  the  Department  of  Agriculture  Cooperation  and  Farmers' Welfare implements an interest subvention scheme for short term crop loans up to Rs. 3.00 lakh. The scheme  provides  interest  subvention  of  2%  per  annum  to  Banks  on  use  of  their  own  resources. Besides, additional 3% incentive is given to the farmers for prompt repayment of the loan, thereby reducing the effective rate of interest to 4%.

Further,  in  order  to  provide  long  term  refinance  to  Cooperative  banks  and  Regional  Rural  Banks (RRBs) to encourage long term investment credit lending in agriculture, Long Term Rural Credit Fund (LTRCF) was created with NABARD out of shortfall in achievement of Priority Sector Lending (PSL) targets by Scheduled Commercial Banks. At present the interest rate on advances to banks under LTRCF is at 4.70%. Banks have to ensure that the benefit of concessional interest is passed on to the ultimate borrower.

The Government has taken the following other major initiatives to provide hassle free credit to farmers and for  development  of  agriculture  and  welfare  of  farmers  including  those  belonging  to  Scheduled Castes, Scheduled Tribes and Other Backward Classes:

-  As per extant directions of Reserve Bank of India on Priority Sector Lending, a target of 18 per cent of Adjusted Net Bank Credit or Credit Equivalent of Off-Balance Sheet Exposure has been prescribed to all domestic Scheduled Commercial Banks, including Small Finance Banks, for lending to  Agriculture.  A  sub-target  of  8%  is  also  prescribed  for  lending  to  small  and  marginal  farmers including landless agricultural labourers, tenant farmers, oral lessees and share croppers.
-  The  Government  has  introduced  the  Kisan  Credit  Card  (KCC)  Scheme,  which  enables farmers to purchase agricultural inputs such as seeds, fertilisers, pesticides, etc. and draw cash to satisfy  their  agricultural  and  consumption  needs.  The  KCC  Scheme  has  since  been  simplified  and converted into ATM enabled RuPay debit card with, inter alia, facilities of one-time documentation, built-in cost escalation in the limit, any number of drawals within the limit, etc.
-  Under the Kisan Credit Card (KCC) Scheme, a flexible limit of Rs. 10,000 to Rs. 50,000 has been  provided  to  marginal  farmers  (as  Flexi  KCC)  based  on  the  land  holding  and  crops  grown including post harvest warehouse storage related credit needs and other farm expenses, consumption needs, etc., plus small term loan investments without relating it to the value of land.
-  RBI has conveyed to Banks to waive margin/ security requirements of agricultural loans upto Rs.1,00,000/-. The requirement of 'no due' certificate has also been dispensed with for small loans upto Rs.50,000/- to small and marginal farmers, share croppers and the like and, instead, only a selfdeclaration from the borrower is required.
-  To bring small, marginal, tenant farmers, oral lessees, etc. into the fold of institutional credit, Joint Liability Groups (JLGs) have been promoted by banks.