IntroductionThe agrarian crisis that has spread through ruralIndia for the past few years has been related mainly with the rising burden ofobligation among farmers. The inability to repay past obligation and alongthese lines to get to crisp advances has been generally acknowledged as themost noteworthy proximate reason for the farmers suicides that were so farreaching in Andhra Pradesh and Karnataka, and are clearly proceeding in regionsas far separated as Kerala, Maharashtra and parts of Punjab and Rajasthan. In spite of this, aside from reports from the fieldby some columnists and different observers, there has been nothing in the stateof total information that would give some gauge of the real degree ofobligation. These reports have proposed that the decrease inaccess to institutional credit has driven more agriculturists back toconceivably more exploitative relations with customary moneylenders orinformation merchants. Reimbursement issues, coming about because of the morenoteworthy challenges of development due to rising information costs andunstable yield costs, have been intensified by the higher loan fees charged bythese casual sources.
This is a piece of a series of reports in view ofthe Situation Assessment of Farmers, which covered the education level ofagriculturist families; level of living as estimated by customer use, pay,beneficial resources and obligation; their cultivating practices andinclinations; asset accessibility; awareness and access to mechanicaladvancements, etc. The study was done only in the rural parts of thenation over a period of 12 months. In every one of the 51,770 families spreadmore than 6,638 towns were overviewed in the Central example. The frequency ofobligation was most elevated in Andhra Pradesh, where more than four-fifths ofstudied ranchers were paying off debtors, trailed by Tamil Nadu with almostthree-fourths of homestead family units revealing obligation. In Punjab, Keralaand Karnataka the extent was about 66%. It is important that a portion of the States wherethe agrarian misery is accounted for to be particularly extreme, for example,Andhra Pradesh, Karnataka, Maharashtra, Punjab and Rajasthan, are likewisethose which report large amounts of obligation.
The issue of rural obligation is personallyconnected with issues of continually expanding input costs, unpredictable yieldcosts and challenges in getting to business sectors. In this way, it is tothese parts of generation conditions in agribusiness that approach intercessionshould now be coordinated.Figure 1: Debt outstandingon farmers (source: The Hindu Business Online) Kisan Credit Card SchemeIntroductionTheKisan Credit Card (KCC) scheme was introduced in 1998 for issue of Kisan CreditCards to farmers on the basis of their holdings for uniform adoption by thebanks so that farmers may use them to purchase agriculture inputs such asseeds, fertilizers, pesticides etc. and draw cash for their production needs.
Itwas further extended for non-farm activities in the year 2004. The scheme wasfurther revisited in 2012 by a working Group with a view to simplify the schemeand facilitate issue of Electronic Kisan Credit Cards. The scheme providesbroad guidelines to banks for operationalizing the KCC scheme. The scheme canbe implemented by Commercial Banks, RRBs, Small Finance Banks and Cooperatives.It aims to provide adequate and timely credit support from the banking systemunder a single window with flexible and simplified procedure to the farmers fortheir cultivation and other needs as indicated below: To meet the short term credit requirements for cultivation of crops; Post-harvest expenses; Produce marketing loan; Consumption requirements of farmer household; Working capital for maintenance of farm assets and activities allied to agriculture; Investment credit requirement for agriculture and allied activities. EligibilityThefollowing are eligible to avail KCC:a. Farmers – individual/joint borrowers who are ownercultivators;b. Tenantfarmers, oral lessees & share croppers;c.
Self Help Groups (SHGs) or Joint Liability Groups(JLGs) of farmers including tenant farmers, share croppers etc. SalientFeatures of KCCThescheme currently provides: Production credit Working capital requirements for allied activities Ancillary credit requirements related to crop production Contingent needs and Accidental insurance of KCC borrowers.Croploans disbursed under KCC scheme for notified crops are covered under NationalCrop Insurance scheme. The purpose of the scheme is to protect the interest offarmers against crop loss caused by natural calamities, pest attacks etc. Benefitsof KCC Scheme Simplified disbursement procedures Rigidity regarding cash and kind is removed Requirement of loan application for every crop is done away with Assured availability of credit at any time enabling reduced interest burden for the farmer. Assists in buying seeds, fertilizers as per farmer’s choice and convenience Helps buy on cash-avail discount from dealers Provides credit facility for 3 years – no need for seasonal appraisal High credit limit based on agriculture income No limit on number of withdrawals subject to credit limit Repayment to be made only after harvest Rate of interest as applicable to agriculture advance Security, margin and documentation norms as applicable to agricultural advance Access to adequate and timely credit to farmers Round the year credit requirement of the borrower have been taken care of Reduction in paper work and simplified documentation process for withdrawal of funds from the bank Assured availability of credit at any time enabling reduced interest burden for the farmer Flexibility of withdrawals from a branch other than the issuing branch at the bank’s discretion Featuresof Kisan Credit Card Scheme Farmers eligible for production credit of ? 5000 or more are eligible for issue of Kisan Credit Card Eligible farmers to be provided with a Kisan Credit Card and a pass book or card-cum-pass book Revolving cash credit facility involving any number of withdrawals and repayments within the limit Limit to be fixed on the basis of operational land holding, cropping pattern and scale of finance Entire production credit needs for full year plus ancillary activities related to crop production to be considered while fixing limit Sub-limits may be fixed at the discretion of banks Card valid for 3 years subject to annual review. As incentive for good performance, credit limits could be enhanced to take care of increase in costs, change in cropping pattern, etc. Each withdrawal to be repaid within a period not exceeding 12 months Conversion/re-scheduling of loans is permitted in case of damage to crops due to natural calamities Security, margin, rate of interest, etc.
as per RBI norms Operations may be through issuing branch or other designated branches at the discretion of bank Withdrawals through slips/cheques accompanied by card and passbook Benefitsto Banks Reduction in work load for branch staff by avoidance of repeat appraisal and processing of loan papers under Kisan Credit Card Scheme Minimum paper work and simplification of documentation for withdrawal of funds from the bank Improvement in recycling of funds and improved loan recovery Reduction in transaction costs for the banks Improved Banker – Client relationships Insuranceunder KCCKCCholders are covered by a personal accident insurance. This cover is availablewhen the person enters the scheme. The cover is as given below: Death : 50,000 Disability: 25000 Maximum Age to enter : 70 years Usageof KCCUnderKCC scheme, the loan amount is disbursed in cash throughdrawings made via withdrawal slips accompanied by KCC-cum-passbook.
Chequebooks are also issued to literate KCC holders enjoying KCC limit exceeding ?25000 Interestand other charges on Kisan Credit CardsTheinterest rates on Kisan Credit Cards depends on the bank the borrowing limits.Generally, 9% per annum interest rate is charged for KCC borrowing limit up to ?3 Lakh. However, central government provides interest subvention to thefinancing institutions. For holders with good track record; a further 2%interest subsidy is provided.
Credit limit may be enhanced post three years ofgood track record.Thereare certain overhead costs for borrowing under KCC. These include processingfee, charges on land mortgage deed, passport photo charges, insurance premiumetc. NABARD Study on revised KCCNABARDconducted a study as per the directive of central government to conduct a studyregarding the implementation of revised KCC in 2015.Given below are thefindings of the study, which included 6 states (Assam, Bihar, UP, Punjab,Maharashtra and Karnataka):Sinceinception, the cumulative number of KCC’s issued till March 2015 had reached to146.4 million. However, this number of KCC accounts cannot be considered ascoverage of number of farmers under KCC scheme, as many farmers have gotreissued/ renewed their KCC several times. The number of operative/ live KCC ason 31 March 2015 stood at 74.
1 million. This achievement is against the totaloperational land holdings estimated at 138.3Millionby Agricultural Census (2010-11) or number of agricultural households estimatedat 9.02 by National Sample Survey Organization (70th Round). This is summarizedbelow:Figure 2: Total KCC issued since inception (source:NABARD report) State-wiseanalysis of live/operational KCC’s indicate that the 6 big states, namely,Uttar Pradesh, Andhra Pradesh, Maharashtra, Rajasthan and Madhya Pradesh combinedaccount for about 55% of all live/operational KCC’s.
Branchmanagers were found to have knowledge regarding the 5 year validity of KCC aswell as adding of 10-20% above the crop loan requirement. However, most of themanagers were unaware that limit was fixed on the assumption that the farmerwould not change his cropping pattern. A change in cropping pattern requiredre-working of the limit, but was not followed as evidenced from the absence ofany such instances found for the same. Figure 3: Year-wise breakup of KCC issued (source:NABARD) Dueto higher workloads, most of the managers were unable to visit farmer’s fieldsto verify their cropping pattern, which was a factor in deciding KCC limit.Boththe farmers as well as the bankers were unwilling to go beyond the limit of ?1Lakh to avoid mortgage of land, or ?3 Lakh if interest subvention was notavailable.
Thecrop insurance scheme was implemented in almost all the states except Punjab.Bankscharged interest rate of 7% up to ?3 Lakh but varied from bank to bank for croploans exceeding the amount.Fewfarmers preferred to have KCC from multiple banks.Hugegaps existed between the number of agricultural holding and number ofoperational KCC. These were due to:· Farmers havingmultiple income sources· Bankers’unwillingness to finance farmers with small land holdings· Inability topresent land holding documents· Unawareness onpart of farmers about the pros and cons of the scheme
