Lok Sabha Question No. 6174 (UNSTARRED), answered on 2017-04-11
Subject: Agricultural Credit
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: DEVUSINH JESINGBHAI CHAUHAN, CHANDRAKANT RAGHUNATH PATIL

## GOVERNMENT OF INDIA MINISTRY OF AGRICULTURE AND FARMERS WELFARE DEPARTMENT OF AGRICULTURE, COOPERATION AND FARMERS WELFARE

## LOK  SABHA UNSTARRED QUESTION NO.6174

TO BE ANSWERED ON THE  11 TH  APRIL, 2017

## AGRICULTURAL CREDIT

6174.  SHRI DEVUSINH CHAUHAN: SHRI C.R. PATIL:

Will  the  Minister  of  AGRICULTURE  AND  FARMERS  WELFARE      ‡ãðŠãäÓã एवं  कसान कयाण ½ãâ¨ããè be pleased to state:

- (a) whether a quantum of funds remain invested in the agricultural credit by way of principal or interest in the country and if so, the details thereof;
- (b) whether the  Government is aware that the claims are not paid in time thereby depriving the finance lending institutes to utilize their funds for further use and if so, the details thereof and the response of the Government thereto;
- (c) whether  the  Government  is  contemplating  to  sanction  the  claim  of  interest subvention at the earliest or provide 90 per cent of the claim amount in advance in order to reduce the financial burden of interest; and
- (d) the  steps  taken  by  the  Government  to  strengthen  the  finances  of  the  District Central  Co-operatives  Banks  and  Primary  Agriculture  Co-operative  societies  so  that their finances are strengthened?

## ANSWER

MINISTER OF  STATE IN THE  MINISTRY OF  AGRICULTURE AND  FARMERS  WELFARE

‡ãðŠãäÓã एवं  कसान  कयाण ½ãâ¨ããÊã¾ã  ½ãñâ  Àã·¾ã  ½ãâ¨ããè (  SHRI PARSHOTTAM RUPALA)

- (a): The  Government  announces  annual  agriculture  credit  flow  targets  towards production credit (short  term crop  loan) and  investment credit  (term  loan).  During the past  three  years  i.e.  2014-15,  2015-16  and  2016-17  the  total  agriculture  credit  flow targets have been Rs. 8 lakh crore, Rs. 8.5 lakh crore and Rs. 9 lakh crore respectively and the actual achievement of ground level credit flow   has surpassed the targets in 2014-15  and  2015-16.  In  2016-17  as  well  the  achievement  as  in  December  2016  is Rs.757311.00 crore and likely to surpass the target.
- (b) & (c): The National Bank for Agricultural and Rural Development (NABARD) and Reserve  Bank  of  India  (RBI)  raise  claims  with  the  Government  under  its  Interest Subvention Scheme (ISS), wherein interest subvention of 2% per annum is provided to Public/Private  Sector  Banks  (PSBs),  Cooperative  Banks  and  Regional  Rural  Banks (RRBs) on their own funds used for short-term crop loan up to Rs. 3 lakh extended to farmers at a subvented interest rate of 7% per annum for a period of one year and a further 3% interest subvention to farmers provided as incentive on prompt repayment.

As  per  the  ISS  provisions  the  banks  should  submit  their  audited  claims  to NABARD and RBI on a half yearly basis and these are forwarded to the Government for settlement on quarterly basis. The Government clears the audited claims as and when these are received from NABARD/RBI. There is no proposal to provide 90% of the claim amount in advance.

(d): The  following  measures  have  been  taken  by  NABARD  to  provide  financial support to strengthen finances of Cooperative Banks:-

(i)  In  order  to  improve  the  capital  of  the  banks  NABARD  has  issued  guidelines  to achieve 9% Capital to Risk (Weighted) Assets Ratio (CRAR) stipulated by RBI and has also urged State Governments to provide capital support to cooperative banks in case the banks fall short in their capital mobilization.

(ii)  The  Government  has  approved  an  assistance  package  for  23  unlicensed  District Central  Co-operatives  Banks  (DCCBs)  to  strengthen  their  financial  position  to  enable them to secure RBI license and a total assistance of Rs 2560.29 crore was released to these banks with State Government  share  of Rs. 1998.22 crore and Central Government share of Rs 562.07 crore. As a result, 20 DCCBs improved their CRAR and received license from RBI.

(iii)  NABARD  is  providing  refinance  to  Cooperative  Banks  for  financing  short  term {Seasonal Agricultural Operations (SAO)} loans to farmers as per the funds allocated by Government of India from time to time.

(iv) In view of banks facing liquidity constraints due to reasons like drought conditions and increased demand, withdrawal of deposits by Central Cooperative Banks (CCBs), etc. NABARD  has  provided additional short-term refinance for SAO  to State Cooperative    Banks    over  and  above  normal  short  term  (SAO)  limit  during  the  year 2016-17.

(v) On lines with RBI instructions, Cooperative Banks were advised by NABARD to act with empathy and consider restructuring and granting fresh loans without waiting for the receipt of the insurance claims.

(vi)  Refinance  for  Medium  Term  conversion  of  short-term  loan  on  account  of  natural calamity is provided to Cooperative Banks making farmers eligible for fresh short term (SAO) finance.

(vii)  Refinance support to Cooperative Banks is also provided for financing short term (Weavers) / short term-other purposes.

(viii)  Long  Term/  Medium Term loan is also provided to enable Cooperative Banks to provide loans to farmers for undertaking all eligible agriculture and allied activities such as Dairy, Poultry, Minor Irrigation, Farm Mechanization, Land Development, Plantation & Horticulture, etc.

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