Lok Sabha Question No. 2171 (UNSTARRED), answered on 2016-07-29
Subject: Agricultural Loan Guarantor
Ministry: FINANCE
Asked by: PINAKI MISRA

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

## LOK SABHA

## Unstarred Question No. 2171

To be answered on July 29, 2016/Shravana 7, 1938 (Saka)

## Agricultural Loan Guarantor

2171. SHRI PINAKI MISRA:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government  has  any  proposal  to  involve  a  guarantor  for  the  bank  loan  taken  by  the farmers for agricultural purposes in order to ensure that the farmers do not commit suicide in case of crop failure; and
- (b) if so, the details thereof?

Answer The Minister of State in the Ministry of Finance (Shri Santosh Kumar Gangwar)

(a) and (b): No, Madam. However, each bank has its own loan policy, approved by its Board, based on the guidelines issued by Reserve Bank of India (RBI).

Further, in order to reduce the debt burden of farmers, increase the availability of hassle-free institutional credit for agricultural operations and mitigate the hardships faced by farmers, the following major steps have been taken by the Government :

-  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 to 33% crop loss in line with the National Disaster Management Framework.
-  'Pradhan Mantri Fasal Bima Yojana' was launched on 1 April, 2016 to benefit the farmers. Under the  scheme, uniform premium of 2 per cent of the sum insured is to be charged for all Kharif crops & 1.5 per cent for Rabi crops. The annual premium for horticultural crops will be 5 per cent of the sum insured.
-  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.
-  Loan to  distressed  farmers  indebted  to  non-institutional  lenders  is  an  eligible  category  of  farm credit  under  the  Priority  Sector  Lending  (PSL)  directions  issued  by  RBI.  This  is  intended  to provide hassle-free institutional credit to farmers for repaying their debt to moneylenders.
-  Banks have been advised by RBI to waive margin/security requirements of agricultural loans upto Rs.1,00,000/-.  Banks  have  also  been  advised  by  RBI  to  dispense  with  obtaining  'No  Due Certificate' from the individual borrowers (including SHGs & JLGs) in rural and semi-urban areas for all types of loans including loans under Government Sponsored Schemes, irrespective of the amount involved, unless the Government Sponsored Scheme itself provides for obtention of 'No Dues Certificate'.