Lok Sabha Question No. 2474 (UNSTARRED), answered on 2019-12-03
Subject: Agricultural  Loans
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: Sumedhanand Saraswati, Balak Nath

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

## LOK SABHA

## UNSTARRED QUESTION NO.2474

TO BE ANSWERED ON THE 3 RD  DECEMBER, 2019

## AGRICULTURAL LOANS

## 2474.  SHRI SUMEDHANAND SARASWATI: SHRI BALAK NATH:

Will  the  Minister  of  AGRICULTURE AND FARMERS WELFARE कृ ष एवं कसान कयाण मंी be pleased to state:

(a) the  details  of  schemes  being  formulated/run  by  the  Government  for  disbursement  of loans to farmers including loans for various agricultural operations;

(b) the  total  amount  of  loan  disbursed  to  the  farmers  under  agricultural  schemes  through various banks;

(c) the minimum rate of interest on loan disbursed to farmers for agriculture and agricultural tools/implements; and

(d) the other steps taken or being taken by the Government for easy disbursement of loans to farmers?

## ANSWER

## MINISTER OF AGRICULTURE AND FARMERS WELFARE

कृ ष एवं कसान कयाण मंी (SHRI NARENDRA SINGH TOMAR)

(a) to (d):  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 and to meet the financial needs and the welfare of the people engaged in agriculture sector:-

- (i)  As per 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.
- (ii)  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  and  current  year  as reported by NABARD is as under:

## ( Amount in crore )

|   S. No. | Year    | Achievement   |
|----------|---------|---------------|
|        1 | 2016-17 | 10,65,756.67  |
|        2 | 2017-18 | 11,62,616.98  |
|        3 | 2018-19 | 12,56,829.62  |
|        4 | 2019-20 | 6,96,925.16*  |

* As on 30 September, 2019

(iii) 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 onetime documentation, built-in  cost  escalation  in  the  limit,  any  number  of  drawals  within  the limit,  etc. KCC facility has been extended to fisheries and animal husbandry farmers to help them  meet  their  working  capital  needs.  The  KCC  facility  will  help  fisheries  and  animal husbandry farmers to meet their short term credit requirements of rearing of animals, poultry birds, fish, shrimp, other aquatic organisms and capture of fish.

(iv) Under  the  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.

(v) 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 Rs.1.00 lakh to Rs.1.60 lakh.

(vi) The  requirement  of  'No  Dues  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. Directions have been issued to waive off processing fee, inspection, ledger folio charges and all  other service charges for loans upto Rs.3.00 lakh. KCC is to be issued within 14 days from the receipt of completed application.

(vii) With a view to ensure availability of agriculture credit at a reduced interest rate of 7% p.a. to the farmers, an interest subvention scheme for short term crop loans up to Rs. 3.00  lakh  is  implements.  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%. Further, in order to discourage distress sale by farmers and to encourage them to store their produce in warehouses against warehouse receipts, the benefit of interest subvention scheme has been extended to small and marginal farmers having Kisan Credit Card for a further period of up to six months post-harvest on the same rate as available to crop loan against negotiable warehouse receipt for keeping their produce in Warehouses accredited by Warehousing Development Regulatory Authority (WDRA).

- (viii) Further,  in  order  to  provide  relief  to  the  farmers  affected  due  to  severe  natural calamities, interest subvention of 2% per annum are 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  are provided  to  the  affected  farmers.  The  grant  of  such  benefits  in  cases  of  severe  natural calamities are 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).

(ix) 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.

(x) To develop marketing infrastructure including storage infrastructure facilities in rural areas,  Government  implements  capital  investment  subsidy  scheme  namely  'Agricultural Marketing  Infrastructure  (AMI)',  which  is  a  sub-scheme  under  the  Integrated  Scheme  for Agricultural  Marketing  (ISA).  AMI  scheme  is  a  back  ended  credit  lined  capital  subsidy scheme in  which  rate  of  subsidy  provided  is  25%  and  33.33%  based  on  the  category  of eligible  beneficiary  and  provided  on  capital  cost  of  the  project.  Assistance  under  the  subscheme is available to individuals including farmers, Group of farmers/growers, Registered Farmers Produce Organisations (FPOs), Cooperatives and State agencies etc.

(xi) The Cabinet Committee on Economic Affairs (CCEA) approved on 16 th May, 2018 for creation of corpus of Rs.5,000 crore for Micro Irrigation Fund (MIF) with NABARD for the year 2018-19 and 2019-20. The objectives of the funds is to facilitate the States in mobilizing the resources for expanding coverage of Micro Irrigation by taking up  special and innovative projects  and  also  for  incentivising  micro  irrigation  beyond  the  provisions  available  under Pradhan  Mantri  Krishi  Sinchyee  Yojana  (PMKSY)-  Per  Drop  More  Crop  (PDMC)  to encourage farmers to install micro irrigation systems. The Steering Committee has approved Grant of Loan of Rs.616.14 core by NABARD from MIF as a Top Subsidy (Additional State Share) to the Government of Andhra Pradesh during 2019-20.

(xii) The  Pradhan  Mantri  Jan-Dhan  Yojana  (PMJDY)  provides  access  to  financial services to people at an affordable cost. The Yojana envisages universal access to banking facilities  with  at  least  one  basic  banking  account  for  every  household,  financial  literacy, access  to  credit,  insurance  and  pension  facility.  Under  PMJDY,  an  overdraft  facility  upto Rs.5,000/-  after  satisfactory  operation  in  the  account  for  six  months  can  be  provided  to account

(xiii) NABARD  provides  Short  Term  refinance  support  to  Rural  Financial  Institutions (RFIs) to meet the production and working capital needs of farmers, weavers, artisans etc., and  channelizing  ground  level  credit  towards  agriculture  and  allied  activities.  NABARD extends  Long  Term  Refinance  support  to  RFIs  for  asset  creation  and  Capital  Formation. Long  Term  Refinance  is  available  for  both  farm  and  non-farm  activities.  It  also  provides Medium Term Conversion (MT-C) Refinance Support to State Cooperative Banks (StCBs) and Rural Regional Banks (RRBs) in order to provide relief to farmers distressed from crop damage due to natural calamities.

(xiv) NABARD  is  supporting  development  of  ground  level  institutions  like  Self  Help Groups (HGs), Farmers' Club, Joint Liability Groups (JLGs), and FPOs for ensuring better access to institutional credit.

(xv) To  augment  flow  of  credit  to  farmers,  especially  landless  farmers  such  as  tenant farmers, oral lessees, share croppers etc. for taking up farm activities, NABARD has piloted and developed another bank credit product i.e. JLGs. The JLGs facilitate hassle free credit to farmers both for short and long term purposes without collateral through the banking system. The product relies on mutual guarantee of clients. It serves as a substitute for collateral for loans, minimises the risk in the loan portfolio for the banks, reduces the transaction cost.

(xvi) NABARD has promoted more than 4000 FPOs since 2014-15, covering 29 states & appx. 9 lakh farmers to help in overcoming the challenges of high transaction costs, security stipulations  of  loans  and  also  support  smallholders  in  gaining  access  to  markets,  public services, better price etc. through collective action.

(xvii) NABARD has encouraged and supported the process of bringing RRBs and Rural Co-operative Banks onto Core Banking Solution (CBS) platform. NABARD is also involved in providing  support  to  RRBs  and  CBS-enabled  cooperatives  for  adopting  Information  and Communications  Technology  (ICT)  solutions  to  extend  their  outreach  and  services  to farmers of rural  area.  This  is  also  supported  by  providing  support  to  Banks  for setting  up Financial  Literacy  Centres  (FLCs)  and  strengthening  Rural  Self  Employment  Training Institutes (RSETIs).

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