Lok Sabha Question No. 2286 (UNSTARRED), answered on 2019-12-02
Subject: Loan to Farmers by Money Lenders
Ministry: FINANCE
Asked by: Unmesh Bhaiyyasaheb Patil

## Government of India Ministry of Finance

## LOK SABHA

ANSWERED ON 02.12.2019/ AGRAHAYANA 11, 1941 (SAKA)

## UNSTARRED QUESTION NO-2286 LOAN TO FARMERS BY MONEY LENDERS

2286. SHRI UNMESH BHAIYYASAHEB PATIL:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has conducted any survey to find out the amount of loan taken by farmers from money lenders in the country;
- (b) if so, the details thereof and if not, the reasons therefor;
- (c)  whether  the  Government  has  prepared  any  scheme/programme/set  up  any  Statutory  Debt  Relief Commission to bring out the farmers from indebtedness and free them from the grip of money lenders and if so, the details thereof; and
- (d) the other steps taken/being taken by the Government to improve the banking services in rural areas?

## ANSWER

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

- (a) to (d): The National Sample Survey Organisation (NSSO) conducted a Situation Assessment Survey (SAS) of Agricultural Households in the rural areas of the country, during NSS 70th round (January, 2013December 2013).  The Survey estimated that at all India level, about 40 percent of loan by agricultural households was taken from non-institutional sources, which included employer/landlord, agricultural/professional money lender, shop-keeper/trader, friends, relatives and others.

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 and to meet the financial needs and the welfare of the people engaged in agriculture sector:-

- 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 crore)

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

Source NABARD(*Provisional)

- 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 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.
- 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  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 ` 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  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 ` 6,000 per year will be transferred directly into the bank accounts of beneficiary farmers, in three equal installments of ` 2,000 each.
- 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.
- Pradhan Mantri Fasal Bima Yojana (PMFBY) provides a comprehensive insurance cover against failure of insured crops due to non-preventable natural risks, thus providing financial support to farmers suffering crop  loss/  damage  arising  out  of  unforeseen  events;  stabilizing  the  income  of  farmers  to  ensure  their continuance in farming; and encouraging them to adopt innovative and modern agricultural practices.
- For development of agriculture and welfare of farmers of the country, the Government in DAC&FW, is implementing various Central Sector/ Centrally Sponsored Schemes, which include:

(i) Rashtriya Krishi Vikas Yojana (RKVY)

(ii) National Food Security Mission (NFSM)

(iii) National Agriculture Market (e-NAM)

(iii) National Mission For Sustainable Agriculture (NMSA)

- 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 ` 3000 per month, to the eligible beneficiaries of the scheme, on their attaining the age of 60 years.

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