Lok Sabha Question No. 3358 (UNSTARRED), answered on 2019-12-09
Subject: Loan to Farmers
Ministry: FINANCE
Asked by: Asaduddin Owaisi, Imtiaz Jaleel Syed

## Government of India Ministry of Finance

## LOK SABHA UNSTARRED QUESTION NO-  3358

ANSWERED ON 09.12.2019 /Agrahayana 18, 1941 (Saka)

Loan to Farmers

## 3358. SHRI ASADUDDIN OWAISI: SHRI SYED IMTIAZ JALEEL:

Will the Minister of FINANCE be pleased to state:

- (a)  whether the Union Government has provided cheaper loan to farmers after widespread agitation in different parts of the country, if so, the details thereof;
- (b) whether giving cheaper loans to farmers after agitation, NPAs of banks have increased manifold and banks have opposed this move of the Government, if so, the main points put forward by banks in this regard;
- (c) whether many farmers in the country are wilful defaulters and are taking advantage  of Government loan waiver schemes;
- (d) if so, whether the Government has any scheme to identify such farmers and pass the benefit to needy farmers; and
- (e) if so, the details thereof along with the steps taken or being taken by the Government in this regard?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

(a) to (e): 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  ₹  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%.

As per Reserve Bank of India (RBI) directions, Domestic Scheduled Commercial Banks are required to lend 18% of the Adjusted Net Bank Credit (ANBC) or Credit Equivalent to Off-Balance Sheet Exposure (CEOBE), whichever is higher, towards agriculture. A sub-target of 8% is also prescribed for lending to small  and  marginal  farmers  including  landless  agricultural  labourers,  tenant  farmers,  oral  lessees  and share croppers. Similarly, in the case of Regional Rural Banks 18% of their total outstanding advances is required to be towards agriculture and a sub-target of 8% has been set for lending to small and marginal farmers.

Government fixes agriculture  credit  disbursement  targets  for  the  banking  sector  every  year  and  banks have consistently  surpassed  these  targets.  Details  of  achievement made  in respect  of agriculture credit flow during the last three years as reported by NABARD is as under:

(Amount in Rs. crore)

| Year    | Achievement   |
|---------|---------------|
| 2016-17 | 10,65,755.67  |
| 2017-18 | 11,62,616.98  |
| 2018-19 | 12,54,762.20* |

Source NABARD(*Provisional)

Data on total outstanding Gross Non Performing Assets (GNPAs) and GNPA ratio for Agriculture and Allied Activities, in respect of Scheduled Commercial Banks (SCDs) for the last three years, as reported by RBI, is as under:

| Agriculture and Allied Activities - GNPAs (in Rs. crore)   | Agriculture and Allied Activities - GNPAs (in Rs. crore)   | Agriculture and Allied Activities - GNPAs (in Rs. crore)   | Agriculture and Allied Activities - GNPA ratio (in percent)   | Agriculture and Allied Activities - GNPA ratio (in percent)   | Agriculture and Allied Activities - GNPA ratio (in percent)   |
|------------------------------------------------------------|------------------------------------------------------------|------------------------------------------------------------|---------------------------------------------------------------|---------------------------------------------------------------|---------------------------------------------------------------|
| March 31, 2017                                             | March 31, 2018                                             | *March 31, 2019                                            | March 31, 2017                                                | March 31, 2018                                                | *March 31, 2019                                               |
| 62321                                                      | 85482                                                      | 111854                                                     | 5.60                                                          | 7.16                                                          | 8.45                                                          |

Source: RBI (* Provisional)

As per RBI Master Circular dated July 01, 2015, a 'default', to be categorised as 'wilful default', must be intentional, deliberate and calculated. A "wilful default' would be deemed to have occurred if it is noted that default in meeting payment/repayment obligations is accompanied by any of the events mentioned in the  said  Master  Circular  which,  inter  alia,  includes  diversion  and  siphoning  of  the  borrowed  funds, disposal  or  removal  of  the  movable  fixed  assets  or  immovable  property  given  as  security  without  the knowledge of the lender/bank, etc. The said Master Circular requires Banks and Financial Institutions to put  in  place  a  transparent  mechanism  for  identification  and  penal  action  to  be  taken  against  wilful defaulters as per the relevant provisions therein.

RBI  has  issued  guidelines  (July  1,  2015,  available  on  RBI's  website)  on  willful  defaulters  to  disincentivise borrowers who have money and do not pay or have diverted the funds or siphoned off funds or removed assets given as security, indicting action that includes; (i) restricting additional facilities to such  defaulters  from  banks  and  financial  institutions,  (ii)  barring  of  such  borrowers  from  institutional finance, (iii) criminal action, (iv) removal of directors of such companies from boards and (v) change in management. Further, banks and financial institutions are required to report suit-filed/non-suit filed wilful defaulter accounts of Rs 25 lakhs and above to the four Credit Information Companies (CICs) on at least a monthly basis. CICs have been advised to publish this information on their respective websites. RBI vide  circular  dated  September  29,  2016,  has  provided  a  mechanism  to  publish  photographs  of  wilful defaulters in newspapers as per board approved policy of respective financial institution.

The Government of India/ Reserve Bank of India (RBI)/ NABARD have, inter alia, taken the following major initiatives for providing hassle free crop loans to farmers including small and marginal farmers:

- Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN) scheme has been implemented to provide an assured  income  support  to  all  farmers,  irrespective  of  the  size  of  their  land  holdings  subject  to  the exclusion factor.  Under  this  scheme  direct  income  support  @  of  Rs.6,000 per  year  will  be  transferred directly into the bank accounts of beneficiary farmers, in three equal installments of Rs.2,000 each.
- 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  KCC  Scheme,  a  flexible  limit  of  ₹10,000  to  ₹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.
- The benefits of KCC along with interest subvention have been extended to Animal Husbandry and Fisheries farmers.
- To enhance coverage of small and marginal farmers in the formal credit system, RBI has decided to raise the limit for collateral-free agriculture loans from ₹1 lakh to ₹1.6 lakh.
- 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.
- Pradhan  Mantri  Kisan  Maan-Dhan  Yojana  (PM-KMY)  has  been  launched  as  a  voluntary  and contributory old age pension scheme for all land holding small and marginal farmers for entry age group of  18  to  40  years.  The  scheme  provides  for an assured  monthly pension of  Rs.3000 per month, to the eligible beneficiaries of the scheme, on their attaining the age of 60 years.

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