Lok Sabha Question No. 100 (UNSTARRED), answered on 2021-11-29
Subject: Credit by RRBs
Ministry: FINANCE
Asked by: S. Gnanathiraviam

## Government of India Ministry of Finance

## Department of Financial Services

## LOK SABHA

## UNSTARRED QUESTION NO.100 To be answered on the November 29, 2021/ 8 Agrahayana, 1943 (SAKA)

## Credit by RRBs

100: SHRI GNANATHIRAVIAM S.

Will the Minister of FINANCE be pleased to state:

- (a)    whether  the  Government  provide  assistance  to  a  number  of  small  farmers  belonging  to SCs/STs extended credit by the Regional Rural Banks (RRBs) in the country during each of the last three years and the current year, if so, the details thereof;
- (b)   whether the Government is aware that the farmers are facing a lot of difficulties in getting loans from RRBs; and
- (c)  if so, the corrective measures taken/being taken by the Government to ensure flow of credit to the farmers?

## Answer

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (DR. BHAGWAT KARAD)

- (a)  Regional Rural Banks (RRBs) have been playing an important role in purveying agricultural credit, particularly to Small and Marginal Farmers (SF/MF) and weaker sections of the society.

In terms of the revised guidelines on Priority Sector Lending (PSL) issued by RBI, in respect of RRBs, a target of 18 per cent of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of OffBalance Sheet Exposure (CEOBE), whichever is higher, is prescribed for lending to Agriculture, out  of  which  a  target  of  9  per  cent  is  for  Small  and  Marginal  Farmers  (SMFs).    Further,  PSL guidelines also prescribe a target of 15% of ANBC or CEOBE for lending to Weaker Sections, which, inter-alia , includes SMFs and SCs/STs.

The RRBs have surpassed the prescribed target of lending to the SMFs & Weaker Sections during the years 2018-2019 to 2020-21, with the details as below:

(Amount in ₹ Crore)

| As on       | Loans Outstanding of RRBs   | Loans Outstanding of RRBs   | Loans Outstanding of RRBs   | Loans Outstanding of RRBs   | Loans Outstanding of RRBs   |
|-------------|-----------------------------|-----------------------------|-----------------------------|-----------------------------|-----------------------------|
|             | Total Loans Outstanding     | Small &Marginal Farmers     | Small &Marginal Farmers     | Weaker Sections             | Weaker Sections             |
|             |                             | Amount                      | Share (%)                   | Amount                      | Share (%)                   |
| 31 Mar 2019 | 2,80,755                    | 1,26,958                    | 45.2                        | 1,58,627                    | 56.5                        |
| 31 Mar 2020 | 2,98,214                    | 1,43,103                    | 48.0                        | 1,78,659                    | 59.9                        |
| 31 Mar 2021 | 3,34,171                    | 1,56,106                    | 46.7                        | 1,94,315                    | 58.1                        |

Source: NABARD

(b) & (c)   The Government and RBI have taken the following measures to facilitate the ease of credit flow from RRBs to agriculture sector and SMFs including SC/ST farmers.:

- The  Master  Directions  on  Priority  Sector  Lending  (PSL)  issued  by  RBI  prescribe  an enhanced target of 75% for RRBs for lending to the priority sector, as against the target of 40% applicable to Commercial Banks.
- Target  for  SMF  is    to  be  raised  from  8%  to  10%  between  2020-21  and  2023-24  in  a phased manner.
- Government of India implements an interest subvention scheme under which short term crop loans up to Rs.3.00 lakh are provided to farmers at a reduced interest rate of 7% p.a. 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%.
- The  Kisan  Credit  Card  (KCC)  scheme  was  introduced  in  1998  for  issue  of  KCC  to farmers.  The  scheme  aims  at  providing  adequate  and  timely  credit  support  from  the banking  system  under  a  single  window  with  flexible  and  simplified  procedure  to  the farmers to meet their short term credit requirements for cultivation of crops, investment credit requirement for agriculture and allied activities and other needs.
- 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  lakh  to  Rs.1.6 lakh.
- A  new  scheme  for  KCC  to  Animal  husbandry  and  Fisheries  farmers  has  also  been introduced through Banks, including RRBs, to meet their working capital requirement. The  benefits  of  KCC  along  with  interest  subvention  have  been  extended  to  Animal Husbandry and Fisheries farmers.
- The requirement of 'no dues' certificate has also been dispensed with in respect of small loans up to Rs.50,000 availed by small and marginal farmers, share-croppers and the like and, instead, only a self-declaration from the borrower is required.
- Small,  marginal,  tenant  farmers,  oral  lessees,  etc.  are  to  be  brought  into  the  fold  of institutional credit, Joint Liability Groups (JLGs) promoted by banks.
- NABARD  extends refinance at concessional rate of interest to RRBs for supplementing  their  resources  for  short-term  and  long-term  lending.  Refinance  is expected to increase ground level credit and boost capital formation in agriculture.
- During  2020-21,  NABARD  disbursed  total  refinance  of  ₹44,975  crore  to  RRBs, which included Long Term refinance of ₹15,157 crore and Short-Term refinance of ₹29,818 crore.

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