Lok Sabha Question No. 1037 (UNSTARRED), answered on 2019-02-08
Subject: Relief to Natural Calamity affected Farmers
Ministry: FINANCE
Asked by: Pratyusha Rajeshwari Singh, ANIRUDHAN SAMPATH

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

## LOK SABHA

Unstarred Question No. 1037

To be answered on Friday, February 8, 2019/Magha 19, 1940 (Saka)

## Relief to Natural Calamity affected Farmers

1037. SHRIMATI PRATYUSHA RAJESHWARI SINGH: DR. A. SAMPATH:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Union  Government/  Reserve  Bank  of  India  (RBI)  has  issued guidelines for relief measures including interest free agricultural loans to the farmers affected by drought and considers any special scheme of giving loans to the recent flood affected farmers of Kerala and if so, the details thereof;
- (b)  whether  the  benefits  of  scheme  have  also  been  provided  to  farmers  in  the States/UTs particularly drought hit Kandhamal region of Odisha and flood affected Kerala and if so, the details thereof along with the funds disbursed to the States/ UTs during each of the last three years and the current year, State/UT-wise; and
- (c) the steps taken/being taken by the Government to expedite the identification and sanction of loan to the farmers?

## Answer

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

(a) to (c): 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 from 50% to 33% crop loss in line with the National Disaster  Management Framework. Banks have also been advised not to insist for additional collateral security for restructured loans.

With a view to ensuring availability of agriculture credit at a reduced interest rate, the Government  of  India  in  the  Department  of  Agriculture,  Cooperation  and  Farmers' Welfare (DAC&FW) implements an interest subvention scheme for short term crop loans up to Rs. 3.00 lakh, which provides interest subvention of 2% per annum to Banks on use of their own resources, and,  an additional 3% incentive to the farmers for prompt repayment of the loan, thereby reducing the effective rate of interest to 4%.  Under  the  aforesaid  interest  subvention  scheme,  to  provide  relief  to  farmers affected by natural calamities, the interest subvention (2%) on crop loan continues to be available to banks for the first year on the restructured amount. Such restructured loans may however, attract normal rate of interest from the second year onwards as per policy laid down by the Reserve Bank of India (RBI).

In order to provide relief to the farmers affected due to severe natural calamities, the Government in DAC&FW has decided that interest subvention of 2% per annum will be made available to banks for first three years/entire period (subject to a maximum of five years) on the restructured loan amount, and in all such cases the benefit of prompt repayment incentive at 3% per annum shall also be provided to the affected farmers.  The  grant  of  such  benefits  in  cases  of  severe  natural  calamities  shall, however, be decided by a High Level Committee (HLC) based on the recommendation  of  Inter-Ministerial  Central  Team  (IMCT)  and  Sub  Committee  of National Executive Committee (SC-NEC).

State  Level  Bankers'  Committee  (SLBC),  Kerala  has  informed  that  the  banks  in Kerala  have  restructured  a  total  agricultural  loan  of  Rs.  940.9  crore  in  25869 accounts upto December, 2018 during 2018-19. SLBC, Odisha has reported that a total loan amount of Rs. 82.27 crore was restructured in 14000 accounts in 2017-18 due to natural calamities.

The Government of India/ Reserve Bank of India (RBI)/ National Bank for Agriculture and  Rural  Development  (NABARD)  have,  inter  alia,  taken  the  following  major initiatives for providing hassle free crop loans to farmers :-

-  Government  fixes  agriculture  credit  disbursement  targets  for  the  banking sector every year and banks have consistently surpassed these targets.
-  As per RBI directions, Domestic Scheduled Commercial Banks are required to lend  18%  of  the  Adjusted  Net  Bank  Credit  (ANBC)  or  Credit  Equivalent  to  OffBalance Sheet Exposure (CEOBE), whichever is higher, towards agriculture.
-  Loan to distressed farmers indebted to non-institutional lenders is an eligible category  of  farm  credit  under  the  Priority  Sector  Lending  (PSL)  as  per  directions issued by RBI.
-  The Government has introduced the Kisan Credit Card (KCC) Scheme, which enables farmers to purchase agricultural inputs such as seeds, fertilisers, pesticides, etc.  and  draw  cash  to  satisfy  their  agricultural  and  consumption  needs.  The  KCC Scheme has since  been  simplified  and  converted  into  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.
-  Under the Kisan Credit Card (KCC) Scheme, a flexible limit of Rs. 10,000 to Rs. 50,000 has been provided to marginal farmers (as Flexi KCC) based on the land holding  and  crops  grown  including  post  harvest  warehouse  storage  related  credit needs  and  other  farm  expenses,  consumption  needs,  etc.,  plus  small  term  loan investments without relating it to the value of land.
-  RBI  has  conveyed  to  Banks  to  waive  margin/security  requirements  of agricultural  loans  upto  Rs.1,00,000/-.  Banks  were  advised  by  the  RBI  to  dispense with the requirement of 'No Due Certificate' for small loans up to Rs.50,000/- to small and  marginal  farmers,  share-croppers  and  the  like  and,  instead,  obtain  selfdeclaration from the borrower.
-  To  bring  small,  marginal,  tenant  farmers,  oral  lessees,  etc.  into  the  fold  of institutional credit, Joint Liability Groups (JLGs) have been promoted by banks.