Lok Sabha Question No. 289 (STARRED), answered on 2024-12-16
Subject: Short-term Refinance Loans Sanctioned by NABARD in Karnataka
Ministry: FINANCE
Asked by: Shri G Kumar Naik

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

## LOK SABHA STARRED QUESTION NO. *289

Answered on Monday, 16 December , 2024/Agrahayana 25, 1946 (Saka)

## Short-term Refinance Loans Sanctioned by NABARD in Karnataka

*289 . Shri G Kumar Naik:

Will the Minister of FINANCE be pleased to state:

- (a) the details of the total amount of short-term refinance loans sanctioned by NABARD for Karnataka's seasonal agricultural operations during the last five years, along with the actual amount disbursed each year;
- (b) whether the Government has considered Karnataka's recent request for an increase in the sanctioned limit for concessional short-term refinance loans to meet the seasonal agricultural needs of the State and if so, the details thereof;
- (c) if not, the reasons for reducing the sanctioned limit for Karnataka's short-term refinance loans in 2024-25 despite the State's large agricultural population and significant arid regions; and
- (d) whether the Government is aware of the potential impact of this reduction on Karnataka's farmers including increased financial burden and unrest due to restricted access to affordable credit and if so, the details of measures taken/proposed to be taken to address this issue?

## ANSWER

THE FINANCE MINISTER (SMT. NIRMALA SITHARAMAN)

(a) to (d): A statement is laid on the Table of the House.

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Statement referred in reply to parts (a) to (d) of Lok Sabha Starred Question No. *289 to be  answered  on  16.12.2024  regarding  Short-term  Refinance  Loans  Sanctioned  by NABARD in Karnataka by Shri G Kumar Naik:

(a): The details of the loans sanctioned and disbursed by National Bank for Agriculture and Rural Development (NABARD) during last five years to Karnataka for Seasonal Agricultural Operations are as under:

(Rs. in crore)

|   SN | Funds                                                         |   2019-20 |   2020-21 | 2021-22   |   2022-23 |   2023-24 |
|------|---------------------------------------------------------------|-----------|-----------|-----------|-----------|-----------|
|    1 | Short Term Cooperative Rural Credit Fund (STCRCF)             |      4200 |      5500 | 5483.90   |      5550 |      5600 |
|    2 | Additional Seasonal Agriculture Operation (ASAO)-Cooperatives |      3149 |      2500 | 5414.00*  |      4500 |      5200 |
|    3 | Short Term Regional Rural Bank Fund (STRRBF)                  |       600 |       700 | 723.00    |      1100 |      1100 |
|    4 | ASAO to RRBs                                                  |        50 |       800 | 1250.00*  |      1200 |      1500 |

* Refinance provided under Special Liquidity facility included under ASAO to Cooperatives and ASAO to RRBs during 2021-22. In FY 2020-21, Special Liquidity Facility was extended to Cooperatives and RRBs, with amounts of Rs. 1,700 crore and Rs. 500 crore, respectively

(b) to (d): Based on the shortfall in achievement in Priority Sector Lending (PSL) targets by the  banks,  the  Reserve  Bank  of  India  (RBI)  makes  annual  allocations  under  various  funds including  Short-Term  (Seasonal  Agriculture  Operations)  (ST  (SAO))  funds  of  Short  Term Cooperative Rural Credit Fund (STCRCF) for Cooperative Banks and Short Term Regional Rural Bank (Refinance) Fund (STRRBF) for Regional Rural Banks (RRBs). During FY 202425, PSL shortfall had reduced to Rs. 1.5 lakh crore from Rs. 2.1 lakh crore in FY 2023-24. In view  of  the  reduced  shortfall,  the  allocation  under  various  funds,  including  STCRCF  and STRRBF,  was  rationalized  keeping  in  view  the  demand  of  institutions,  priorities  of  the Government  and  utilization  of  funds  during  previous  years.  As  a  result  of  reduction  in allocation to ST (SAO) funds, there is reduced fund allocation to Karnataka by NABARD.

The reduction in PSL shortfall fund is a clear indication that Banks operated more robustly and are able to provide more lending to the sectors under PSL, deemed crucial for socio-economic development and inclusive growth of the country. The share of Karnataka in Ground Level Credit (GLC) for agriculture stood at 2.07 lakh crore, growing at 20% y-o-y in 2023-24, and the  State's  share  in  the  overall  agriculture  credit  of  the  Country  has  increased  from  8%  to 8.15%. In order to provide seamless access to affordable credit to the farmers, short-term agriculture loans upto Rs. 3 lakhs are provided by banks at 7% interest rate to meet their working capital requirements for purchase of agriculture inputs such as seeds, fertilizers, and pesticides and to draw  cash  for  crop  production  and  allied  activities.  Government  of  India  under  Modified Interest Subvention Scheme (MISS) also provides Prompt Repayment Incentive (PRI) of 3% to farmers for timely repayment of these loans. Therefore, the effective interest rate for farmers is 4%.

Further, to avoid any shortage of funds for lending to farmers in a timely manner, NABARD also provides refinance at market linked rate under the Additional SAO facility, depending on the eligibility of the bank. The banks can avail Interest Subvention at 1.5% and PRI at 3% under Modified Interest Subvention Scheme (MISS) of Government of India.

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