Lok Sabha Question No. 1109 (UNSTARRED), answered on 2017-07-21
Subject: Loans to Small and Medium Farmers in Rural Areas
Ministry: FINANCE
Asked by: SUBHASH CHANDRA BAHERIA

Government of India Ministry of Finance Department of Financial Services

LOK SABHA Unstarred Question No. 1109 To be answered on Friday, July21, 2017/Ashadha30, 1939 (Saka) Loans to Small and Medium Farmers in Rural Areas

†1109. SHRI SUBHASH CHANDRA BAHERIA:

Will the Minister of FINANCE be pleased to state:

(a) whether the Government has issued any guidelines to the private banks in the wake of demonetisation to mandatorily provide loans to small and medium farmers in the rural areas;

(b) if so, the details thereof and if not, the reasons therefor; and

(c) whether the Government proposes to encourage/promote private banks to provide services in rural areas and if so, the details thereof?

## Answer

The Minister of State in the Ministry of Finance (Shri  Santosh Kumar Gangwar)

(a) & (b): Post demonetisation, the Government has taken the following relief measures for the farming sector:

- i. The Government decided that an additional grace period of 60 days for prompt repayment incentive @ 3% will be provided to such of the farmers whose crop loans dues fall due between 01/11/2016 to 31/12/2016 and if such farmers repay the same within 60 days from their due date in this period.
- ii. The Government also decided to grant interest waiver for two months (November and December, 2016) for all  short  term  crop  loan  availed  from  Cooperative  Banks  between  01.04.2016  to  30.09.2016  and  upfront deposit of the same in the accounts of the concerned farmers.
- iii.  National  Bank  for  Agriculture  and  Rural  Development  (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.

Further, the Government in the Department of Agriculture, Cooperation and Farmers' Welfare (DAC&FW) has approved the Interest Subvention Scheme for the continuation in the current financial year 2017-18. Under the Scheme, interest subvention of 2% per annum is provided to Public Sector Banks, Private Sector Scheduled Commercial Banks (in respect of loans given by their rural and semi urban branches only), Cooperative Banks and Regional Rural Banks on their own funds used for short term crop loans uptoRs. 3.00 lakh per farmer provided  the  lending  institutions  make  available  short  term  credit  at  the  ground  level  at  7%  per  annum  to farmers.

- (c):  On the advice of Reserve Bank of India (RBI), domestic scheduled commercial banks including private sector banks have devised three year Financial Inclusion Plans (FIP) congruent with their business strategy and comparative advantage to make it an integral part of their corporate plans. The FIP plans broadly include self-set  targets  in  respect  of  rural  brick  and  mortar  branches  opened;  business  correspondents  (BC) employed; coverage of unbanked villages with population above 2000 as also other unbanked villages with population below  2000 through branches/BCs/other  modes; no-frill accounts opened including through BCICT; Kisan Credit Cards (KCC) and General Credit Cards (GCC) issued.

RBI  has  intimated  that  domestic  scheduled  commercial  banks  (other  than  RRBs)  are  permitted  to  open Banking Outlets in Tier 1 to Tier 6 centres without having the need to take permission from Reserve Bank of India  in  each  case.  Further,  at  least  25  percent  of  the  total  number  of  'Banking  Outlets'  opened  during  a financial year should be opened in unbanked rural centres. A full-fledged 'brick and mortar' branch opened in a rural (Tier 5 and 6) centre which is already being served by a fixed point BC outlet by any bank will also be eligible to be treated as equivalent to opening a 'Banking Outlet' in a Unbanked Rural Centre.