Agriculture loans to farmers by PSBs

Bank Loans Public Sector Bank

Agriculture loans to farmers by PSBs

With a view to ensuring availability of agriculture credit at a reduced interest rate of 7% p.a. to farmers, the Government of India has been implementing interest subvention scheme from 2006-07. In 2016-17, Government in the Department of Agriculture, Cooperation & Farmers’ Welfarehas approved 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.

The agency wise details of agriculture loan outstanding as on 31st December, 2016 (provisional) as reported by National Bank for Agriculture and Rural Development (NABARD) are as under:

The Agricultural Debt Waiver and Debt Relief Scheme, 2008 (ADWDRS, 2008) was announced in the Union Budget 2008-09 and detailed guidelines were issued on 28.5.2008. The debt waiver portion of the ADWDRS, 2008 was closed by its due date i.e. 30.6.2008, while the debt relief portion of the Scheme was extended upto 30.6.2010. The Scheme benefitted 3.73 crore farmers to the extent of Rs. 52,259.86 crore. There is no proposal under consideration of the Union Government to waive off the loans of farmers in the country.

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 :

• The Government has introduced the Kisan Credit Card (KCC) Scheme, which enables farmers to purchase agricultural inputs such as seeds, fertilisers, pesticides, etc. and draw cash to satisfy their agricultural and consumption needs. The KCC Scheme has since been simplified. It has the provision of ATM enabled debit card with, inter alia, facilities of one-time documentation and built-in cost escalation in the limit, etc.

• 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.

• 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.

• RBI has conveyed to Banks to waive margin/security requirements of agricultural loans upto Rs.1,00,000/-.

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