Farmers get agricultural credit Capital Market | March 2018 Share Every year, the Indian government sets benchmarks for the banking industry's distribution of agricultural loans, which banks have routinely exceeded. Information about Agriculture Credit For the last three years (2014–15–2016–17), according to reports from the National Bank for Agriculture and Rural Development (NABARD), targets set by the government and the banks' accomplishments are listed as follows: Target & Achievement for Agriculture Credit (in Rs. Crore)Year Target Assigned by Gol Percentage of Success achieving the goal2014-15 8,00,000.00 8,45,328.23 105.67 2015-16 8,50,000.00 9,15,509.92 107.71 2016-17 9,00,000.00 10,65,755.67 118.42State-specific money lending rules govern the practise of lending money.
The Situation Assessment Survey (SAS) of Agricultural Households was performed by the National Sample Survey Office (NSSO) during the NSS 70th cycle (January 2013–December 2013) in rural parts of the nation for the reference period of the agricultural year July 2012–June 2013 and yielded the following results:- The projected debt-to-income ratio for agricultural families in the nation was 52 percent. About 60% of the outstanding loans throughout all of India came from institutional sources, which comprised the government (2.1%), cooperative societies (14.8%), and banks (42.9%). In order to boost institutional credit flow and include more and more farmers, especially small and marginal farmers, in the institutional credit system, the government and Reserve Bank of India (RBI) have adopted a number of actions
These measures inter alia, include the following major steps to provide hassle free crop loan to farmers including small and marginal farmers (SF/MF):- As per RBI directions, Domestic Scheduled Commercial Banks are required to lend 18% of the Adjusted Net Bank Credit (ANBC) or Credit Equivalent to Off-Balance Sheet Exposure (CEOBE), whichever is higher, towards agriculture. A sub-target of 8% is also prescribed for lending to small and marginal farmers (SF/MF) including landless agricultural labourers, tenant farmers, oral lessees and share croppers. Similarly, in the case of Regional Rural Banks 18% of their total outstanding advances is required to be towards agriculture and a sub-target of 8% has been set for lending to small and marginal farmers.
The Government of India's Department of Agriculture, Cooperation, and Farmers' Welfare operates an interest subvention plan for short-term crop loans up to Rs. 3.00 lakh in order to guarantee the farmers' access to agricultural finance at a lower interest rate of 7% p.a. The programme offers banks which utilise their own resources an annual interest subsidy of 2%. In addition, farmers get an extra 3% incentive for repaying their loans on time, bringing the effective interest rate down to 4%. The benefits of interest subvention have also been made available to small and marginal farmers with Kisan Credit Cards for an additional period of up to six months (post-harvest) at the same rate as available to crop loans against negotiable warehouse receipts to store their post-harvest produce in Warehouses accredited by Warehousing Development Regulatory Authority (WDRA). This is being done in order to deter farmers from selling their crops in distress
The Kisan Credit Card (KCC) Scheme was established by the government to provide KCC to farmers for universal acceptance by the banks. Farmers may use these cards to easily buy agricultural inputs including seeds, fertiliser, pesticides, and other items, as well as to withdraw cash for their production requirements. A flexible limit of Rs. 10,000 to Rs. 50,000 has been made available to marginal farmers under the Kisan Credit Card (KCC) Scheme (as Flexi KCC), based on the amount of land owned and the crops grown, as well as any post-harvest warehouse storage-related credit needs, other farm expenses, consumption needs, etc., and small term loan investments.
RBI has conveyed to Banks to waive margin/security requirements of agricultural loans upto Rs.1,00,000/-. The requirement of 'no due' certificate has also been dispensed with for small loans up to Rs.50,000 to small and marginal farmers, share-croppers and the like and, instead, only a self-declaration from the borrower is requiredTo bring small, marginal, tenant farmers, oral lessees, etc. into the fold of institutional credit, Joint Liability Groups (JLGs) have been promoted by banks. One of the main objectives of financing through JLGs is to augment flow of credit to landless farmers cultivating land as tenant farmers, oral lessees or share croppers and small / marginal farmers as well as other poor individuals taking up farm activities, off-farm activities and non-farm activities. As on 31st March, 2017, cumulatively 24.53 lakh Joint Liability Groups (JLGs) have been provided Rs.26,848.13 crore loan by banks across the country.
As reported by NABARD the share of SF/MFs accounts in total number financed by all agencies grew from 60.07 per cent in 2015-16 to 72.06 per cent in 2016-17. More importantly, in terms of amount disbursed, the share of SMFs grew from 41.51 per cent (in 2015-16) to 50.14 per cent (in 2016-17). In actual terms, the agriculture credit disbursement towards SF/MF grew from Rs. 3.80 lakh crore in 2015-16 to Rs. 5.34 lakh crore in 2016-17, while the number of SF/MF accounts grew from 5.40 crore to 7.71 crore during this period.