Lok Sabha Question No. 1034 (UNSTARRED), answered on 2016-04-29
Subject: Loan Defaulted Farmers
Ministry: FINANCE
Asked by: C.S. PUTTARAJU, S.SELVAKUMARA CHINNAYAN

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

## LOK  SABHA

Unstarred Question No. 1034

To be answered on April 29, 2016/Vaisakha 9, 1937 (Saka)

## Loan Defaulted Farmers

## Question

1034. SHRI C.S. PUTTA RAJU: SHRI S. SELVAKUMARA CHINNAYAN:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  farmers  are  committing  suicide  due  to  pressure  of  repayment  of  loans  taken from banks in the country;
- b) if so, the details thereof along with the number of farmers who have defaulted on agricultural loans in the country during the last three years, State-wise including Karnataka;

(c)  whether  the  Government has received any complaint against loan recovery agents of the PSBs/financial institutions have been harassing farmers with regard to agricultural/ tractor loans;

(d)  if  so,  the  details  thereof  along  with  the  action  taken  against  the  banks/  institutions  in  this regard; and

- (e) the steps taken by the Government to protect the interest of farmers in this regard?

## The Minister of State in the Ministry of Finance (Shri Jayant Sinha)

(a) and (b): Farmers are indebted to both institutional and non-institutional sources of credit. In order  to  bring  more  and  more  farmers  within  the  fold  of  institutional  credit,  Government  has taken a number of steps. However, borrowing from non-institutional sources is the major reason for distress of debt-ridden farmers, which is one of the reported reasons for farmers'suicide in the  country.  Apart  from  indebtedness,  causes  of  suicide  by  farmers,  inter  alia,  include successive failure of crops, drought, socio-economic factors and personal reasons. Though the information system does not capture separate details of loans taken by the farmers from the money  lenders,  as  per  the  Situation  Assessment  Survey  (SAS)  of  Agricultural  Households, conducted by National Sample Survey Organization (NSSO) during NSS 70 th  round (January, 2013-  December  2013)  in  the  rural  areas  of  the  country  for  the  reference  period  of  the agricultural  year  July  2012-  June  2013,  25.8  percent  of  the  loans  at  the  all-India  level  were estimated to be sourced from 'agricultural/professional money lender'.

Reserve Bank of India (RBI) and National Bank for Agriculture & Rural Development (NABARD) have  informed  that  they  do  not  have  data  regarding  the  number  of  farmers  who  default  on agricultural loans in the country.

(c) & (d): Government/RBI receives complaints in regard to various issues relating to agriculture credit. On receipt of such complaints, the matter is taken up at appropriate level for redressal. RBI  has  reported  that  it  recently  received  a  representation  from  farmers'  associations  (All Farmers' Organisation Committee, Tamil Nadu) against recovery measures adopted by Kotak Mahindra Bank Ltd and M/s Cholamandalam Investment and Finance Company Ltd. RBI has advised its Regional Office to follow the extant guidelines in the matter.

(e):  The following major steps have been taken by Government to reduce the debt burden of farmers and increase the availability of hassle-free institutional credit to farmers:

-  The guidelines on Priority  Sector  Lending  (PSL)  issued  by  RBI  mandate  all  Domestic Scheduled  Commercial  Banks  to  earmark  18%  of  their  Adjusted  Net  Bank  Credit (ANBC) or Credit Equivalent amount of Off-Balance Sheet Exposure (OBE), whichever is higher, as on the corresponding date of the previous year, for lending to Agriculture. Foreign banks with 20 branches and above have to achieve the Agriculture Target within a  maximum period of five  years  starting  from  April  1,  2013  and  ending  on  March  31, 2018.
-  Government sets annual target for the flow of credit to the agriculture sector. Banks have been consistently surpassing the annual target.
-  With a view to ensuring availability of agriculture credit at a reduced interest rate of 7% p.a. to farmers, the Government of India implements an interest subvention scheme for short term crop loans up to Rs. 3.00 lakh. Under the said scheme, additional subvention of  3% is given to those farmers who repay their short term crop loan in time, thereby reducing the effective rate of interest to 4% p.a. for such farmers.
-  In order to ensure that all eligible farmers are provided with hassle-free and timely credit for  their  agricultural  operations, the Government has introduced the Kisan Credit Card (KCC) Scheme, which enables them to draw cash to purchase agricultural inputs such as  seeds,  fertilizers,  pesticides  as  well  as  meet  other  agricultural  and  consumption needs.
-  The KCC Scheme has since been simplified by providing the farmers with ATM enabled debit card based on one-time documentation and built-in cost escalation in the limit, etc.
-  To bring small, marginal, tenant farmers, oral lessees, etc. into the fold of institutional credit, Joint Liability Groups (JLGs) have been promoted by banks.
-  Banks have been advised by RBI to waive margin/security requirements of agricultural loans upto Rs.1,00,000/-, vide RBI's circular dated 18 th  June, 2010.
-  RBI has issued Standing Guidelines for Relief Measures to be provided by respective lending  institutions  in  areas  affected  by  natural  calamities  which,  inter  alia,  include identification  of  beneficiaries,  restructuring  of  existing  loans,  extending  fresh  loans, relaxed  security  and  margin  norms,  moratorium,  etc.  The  Guidelines  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 to 33% crop loss in line with the National Disaster Management Framework.