Lok Sabha Question No. 6551 (UNSTARRED), answered on 2018-04-06
Subject: Strengthening of Rural Financial System
Ministry: FINANCE
Asked by: KAMAL NATH, JYOTIRADITYA MADHAVRAO SCINDIA

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

## LOK SABHA

Unstarred Question No. 6551 To be answered on Friday, April 6, 2018/Chaitra 16, 1940 (Saka)

## Strengthening of Rural Financial System

6551. SHRI KAMAL NATH: SHRI JYOTIRADITYA M. SCINDIA:

Will the Minister of FINANCE be pleased to state:

- (a) whether in a view to double farmer's income the Government has asked banks and National  Bank  for  Agriculture  and  Rural  Development  (NABARD)  to  strengthen  rural financial economic system;
- (b) if so, the details thereof and the total amount of loan provided by banks and NABARD to farmers across the country during the last three years, State/ UT-wise, Year-wise and Bank-wise;
- (c) whether the loan provided to farmers is interest free or at a fixed interest rate; and
- (d)  if  so,  the  details  thereof  along  with  the  growth  of  rural  financial  economic  system across the country?

## Answer

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

- (a)  to  (d):  The  following  major  initiatives  have  been  taken  by  the  Government/Reserve Bank of India (RBI) to increase institutional credit flow to agriculture and rural sector and to bring more and more farmers within the fold of institutional credit:
-  As per guidelines issued by Reserve Bank of India (RBI) on Priority Sector Lending (PSL), a target of 40 per cent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE), whichever is higher, has been prescribed for all Scheduled Commercial Banks (excluding Regional Rural Banks (RRBs)). Within this a sub-target of 18% of the ANBC or CEOBE, whichever is higher, has been set for lending to agriculture.

As  per  the  directions  of  RBI,  Scheduled  Commercial  Banks  having  any  shortfall  in lending  to  priority  sector  shall  be  allocated  amounts  for  contribution  to  the  Rural Infrastructure Development Fund (RIDF) established with NABARD and other Funds with NABARD/NHB/SIDBI/ MUDRA Ltd., as decided by the Reserve Bank from time to time. The interest rates on banks' contribution to RIDF or any other Funds, tenure of deposits, etc. shall be fixed by RBI from time to time.

-  NABARD provides refinance to RRBs and Cooperative Banks at concessional rate of  interest  under  Short  Term  Regional  Rural  Bank  (Refinance)  Fund  and  Short  Term Cooperative  Rural Credit (Refinance) Fund  respectively to meet  their crop loan requirement. Further, long term concessional refinance support is provided by NABARD to Cooperative Banks and RRBs under Long Term Rural Credit Fund (LTRCF) to meet their term loan requirement.
-  The  Government  has  introduced  the  Kisan  Credit  Card  (KCC)  Scheme,  which enables farmers to meet the short term credit requirements for cultivation of crops; Postharvest  expenses;  Produce  marketing  loan;  Consumption  requirements  of  farmer household;  Working  capital  for  maintenance  of  farm  assets  and  activities  allied  to agriculture;  and  Investment  credit  requirement  for  agriculture  and  allied  activities.  The KCC  Scheme  provides  for  issue  of  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.
-  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%.
-  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 up to Rs.50,000/- to small and marginal farmers, share-croppers and the like and, instead, only a self-declaration 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.
-  To ensure hassle free and smooth flow of credit to the farmers, Government fixes agriculture credit disbursement targets for the banking sector every year and banks have consistently surpassed these targets.

The  agency-wise  and  State-wise  details  of  agriculture  credit  disbursed  by  Scheduled Commercial Banks, Regional Rural Banks (RRBs) & Cooperative banks during the last 03 years are given in Annexure I to III.