Lok Sabha Question No. 3779 (UNSTARRED), answered on 2017-03-24
Subject: Short Term Agriculture Loan
Ministry: FINANCE
Asked by: DEVUSINH JESINGBHAI CHAUHAN, JAYSHREEBEN  PATEL

- In order to discourage distress sale of crops by small and marginal farmers, the benefit of interest subvention of 2% will be available to small and marginal farmers having Kisan Credit Card for a further period of up to six months against negotiable warehouse receipts for keeping their produce in warehouses.
- To provide relief to farmers affected by natural calamities, the interest subvention of two percent will continue to be available to banks for the first year on the restructured amount. Such restructured loans may attract normal rate of interest from the second year onwards as per the policy laid down by the Reserve Bank of India (RBI).

(b) to (e): National Bank for Agriculture & Rural Development (NABARD) has reported that the quantum of refinance for Cooperative Banks depends on the Short Term Cooperative Rural Credit (Refinance) Fund, which is made available to NABARD from out of the shortfall in priority sector lending targets by commercial banks. As per the policy circular of NABARD, the normal quantum of refinance for 2016-17 for State Cooperative Banks (StCBs) has been set 40 per cent of their Realistic Lending Programme (RLP). Further, Government has decided that NABARD will make short term borrowings at prevailing market rate of interest for approx. Rs. 20,000 crore for on-lending to Cooperative Banks at 4.5% rate of interest. Accordingly, the quantum of refinance for provision of Short Term (ST) Refinance to State Cooperative Banks for financing ST (SAO) loans has been increased from existing level of 40% of RLP of the banks to 55% of RLP.

As reported by NABARD, the details of refinance sanctioned to Gujarat StCB by NABARD and utilization thereof against during the last three years are as under:

(Amount in ~ crore)

| Year    | Gujarat          | Gujarat     |
|---------|------------------|-------------|
|         | Limit Sanctioned | Utilization |
| 2014-15 | 4400.00          | 4386.22     |
| 2015-16 | 3700.00          | 3700.00     |
| 2016-17 | 5845.00          | 5843.34     |

Further, NABARD has provided additional short-term refinance for Short Term­ Seasonal Agricultural Operations (ST-SAO) to StCBs and RRBs over and above normal ST-SAO limit during the year 2016-17. An overall amount of Rs.6284.80 cr. has been released by NABARD to State Cooperative Banks under this line of credit during 2016-17. Gujarat StCB has availed refinance to the tune of Rs.1200 crore under this facility during current year.

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## Government of India Ministry of Finance Department of Financial Services LOKSABHA

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Unstarred Question No.3779 To be answered on Friday, March 24, 2017/Chaitra 3, 1939 (Saka) Short Term Agriculture Loan

3779. SHRI DEVUSINH CHAUHAN: SHRIMATI JAYSHREEBEN PATEL:

Will the Minister of FINANCE be pleased to state:

- (a) the details of salient features of the interest subvention scheme for short term crop loan;
- (b) whether the Government has reduce the eligible quantum of refinance from 50 per cent to 40 per cent of under Realistic Landing pr;ogramme for the year 2015~1e, if '0, the details thereof and the reasons therefor;
- (c) whether the refinance limit applied for by the Gujarat State Cooperative Banks has been reduced during 2015-16 and 2016-17 thereby putting District Central Banks of the State under pressure in order to meet financial requirement of the farmers, if so, the details thereof and the reasons therefor along with the corrective steps taken by the Government in this regard;
- (d) whether the National Bank for Agriculture and Rural Development (NABARD) has deprived 40 per cent of the eligible farmers of Gujarat from applying for cheap short term agricultural loan of Rs. 3 lakh @ 7 per cent, if so, the details thereof; and
- (e) the action being taken by the Government in this regard in order to mitigate the fund requirement of cooperative banks of the State?

## Answer

The Minister of State in the Ministry of Finance

(Shri Santosh Kumar Gangwar)

- (a): With a view to ensuring availability of agriculture credit at a reduced interest rate of 7% p.a. to farmers, the Government of India in the Department of Agriculture, Cooperation & Farmers' Welfare implements an interest subvention scheme for short term crop loans up to Rs.3.00 lakh. The salient features of the said Interest Subvention Scheme for the year 2016-17 are given below:
- An interest subvention of 2% will be made available to banks so that they lend the short term crop loan up to Rs.3.00 lakh @ 7% p.a. Besides, additional subvention of 3% will be given to those farmers who repay their short term crop loan in time, thereby reducing the effective rate of interest to 4% p.a. for such farmers.