Lok Sabha Question No. 3346 (UNSTARRED), answered on 2017-08-04
Subject: Farm Loan Write Off
Ministry: FINANCE
Asked by: MIDHUN REDDY

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

## LOKSABHA Unstarred Question No. 3346 To be answered on Friday, August 4, 2017/Shravana 13, 1939 (Saka) Farm Loan Write Off

3346. SHRI P.V. MIDHUN REDDY:

Will the Minister of FINANCE be pleased to state:

- (a) whether the farm loan write off is a permanent relief to the farmers;
- (b) if so, the details thereof;
- (c) if not, whether the Government is looking for long term measures; and
- (d) if so, the details thereof?

## Answer

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

(a) to (d): There is no scheme for waiver of loans of farmers under implementation by the Union Government.

In order to reduce the debt burden of farmers and increase availability of institutional credit to farmers, following major initiatives have been taken:

- The guidelines on Priority Sector Lending (PSL) of Reserve Bank of India (RBI) mandate all Domestic Scheduled Commercial Banks to earmark 18% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent amount of Off-Balance Sheet Exposure (OBE), whichever is higher, as on the corresponding date of the previous year, for lending to Agriculture.
- Government sets annual target for the flow of credit to the agriculture sector. Banks have been consistently surpassing the annual target.
- 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. Under the said scheme, additional subvention of 3% is 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.
- In order to ensure that all eligible farmers are provided with hassle-free and timely credit for their agricultural operations, the Government has introduced the Kisan Credit Card (KCC) Scheme, which enables them to draw cash to purchase agricultural inputs such as seeds, fertilisers, pesticides as well as meet other agricultural and consumption needs.The KCC Scheme has since been simplified by providing the farmers with ATM enabled debit card based on one-time documentation and built-in cost escalation in the limit, etc.
- To bring small, marginal, tenant farmers, oral lessees, etc. into the fold of institutional credit, Joint Liability Groups (JLGs) have been promoted by banks.
- Banks have been advised by RBI to waive margin/security requirements of agricultural loans upto Rs.1,00,000/-, vide RBI's circular dated rs" June, 2010.
- Reserve Bank of India (RBI) has issued directions for Relief Measures to be provided by respective lending institutions in areas affected by natural calamities which, inter alia, include, restructuring/rescheduling of existing crop loans and term loans, extending fresh loans, relaxed security and margin norms, moratorium, etc. These directions have been so designed that the moment calamity is declared by the concerned District Authorities, they are automatically set in motion without any intervention, thus saving precious time. The benchmark for initiating relief measures by banks has also been reduced to 33% crop loss in line with the National Disaster Management Framework.

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