Lok Sabha Question No. 722 (UNSTARRED), answered on 2018-12-14
Subject: Disbursal of Farm Loans
Ministry: FINANCE
Asked by: A.T. (NANA) PATIL

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

## LOK SABHA

Unstarred Question No. †722

To be answered on Friday, December 14, 2018/Agrahayana 23, 1940 (Saka)

## Disbursal of Farm Loans

†722. SHRI A.T. NANA PATIL:

Will the Minister of FINANCE be pleased to state:

(a) the number of banks that disbursed 18 per cent of loans to farmers as per prescribed norms in Maharashtra and other States;

(b) whether there have also been cases of frauds by some banks in this regard to meet their targets and if so, the details thereof; and

(c) the concrete steps taken by the Government to ensure timely disbursal of loans to the farmers and to stop frauds by certain banks in this regard?

## Answer

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

(a)  &  (b):  As  per  extant  directions  of  Reserve  Bank  of  India  (RBI)  on  Priority  Sector Lending  (PSL),  a  target  of  18  per  cent  of  Adjusted  Net  Bank  Credit  (ANBC)  or  Credit Equivalent of Off-Balance Sheet Exposure (CEOBE) has been prescribed to all domestic Scheduled Commercial Banks, including Small Finance Banks, for lending to Agriculture. Against the said target, agriculture advances by Public Sector Banks as on 31.03.2018 is 17.96%, as reported by RBI.

In regard to frauds in scheduled commercial banks, RBI has reported that separate data for the category- loans to farmers, is not centrally maintained.

In  regard  to  Regional  Rural  Banks  (RRBs),  National  Bank  for  Agriculture  and  Rural Development  (NABARD)  has  reported  that  no  case  of  frauds  have  been  reported  with regard to meeting the targets by RRBs  in disbursement of Priority Sector and Agriculture loans.

- (c): The following major initiatives have been taken by the Government/Reserve Bank of India (RBI) to provide hassle free crop loan to farmers:-
-  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%.
-  Government  fixes  agriculture  credit  disbursement  targets  for  the  banking  sector every year and banks have consistently surpassed these targets.

 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.

 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.

The measures taken to control and prevent frauds in the banks, inter-alia, are as follows:

(i) In May, 2015, the Government of India issued instructions to all the CMDs/MD & CEOs of Public Sector Banks (PSBs) on 'Framework for timely detection, reporting, investigation etc.  relating  to  large  value  bank  frauds',  which,  inter-alia  provides  that  all  accounts exceeding Rs. 50 crore, if classified as Non-Performing Assets, should be examined by banks  from  the  angle  of  possible  fraud.  A  report  would  be  placed  before  the  Bank's Committee for review of NPAs on the findings of this investigation. The above instructions have been reiterated in February, 2018.

(ii) RBI has issued Master Direction on 'Frauds - Classification and reporting' dated July 01, 2016. To compress the time taken in detection of fraud, a framework for handling loan frauds has been put in place. Objective of this framework is to direct the focus of banks on the  aspects  relating  to  prevention,  early  detection,  prompt  reporting  to  the  RBI  and  the investigative agencies (for instituting criminal proceedings against the fraudulent borrowers) and timely initiation of the staff accountability proceedings.

(iii) For deterring economic offenders from evading the process of Indian law by remaining outside Indian jurisdiction, Government has introduced the Fugitive Economic Offenders Bill, 2018 to provide for attachment and confiscation fugitive economic offender's property and has advised PSBs to obtain certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs. 50 crore.

(iv) For enforcement of auditing standards and ensuring the quality of audits, Government has initiated  establishment  of  National  Financial  Reporting  Authority  as  an  independent regulator.

(v) To send a clear message that borrowers cannot wilfully default and continue to enjoy ownership  of  their  assets,  wilful  defaulters  and  connected  persons  have  been  debarred from  participating  in  the  resolution  process  under  the  Insolvency  and  Bankruptcy  Code (IBC).