The government on Thursday decided to boost the flow of credit to the agriculture by attempting to bring more farmers under the Kisan Credit Card (KCC) scheme and through an additional outlay for farm loan refinance.
As announced by finance minister Nirmala Sitharaman, 25 million farmers who do not have a Kisan Credit Card will now be able to avail concessional credit. The government will conduct a “special drive" to bring these farmers under the ambit of KCC.
“Nearly ₹2 trillion of concessional credit will be extended to boost farming activities. The special drive will include 25 million farmers who do not, at the moment, have the KCC," said Sitharaman, adding that fishermen and animal husbandry farmers will also be included in KCC.
Introduced in 1998, the Kisan Credit Card (KCC) scheme provides term loan for agricultural needs of the farmers. The model of KCC scheme was prepared by the National Bank for Agriculture and Rural Development (Nabard) that met the recommendations of the RV Gupta Committee. The KCC is available at all Indian banks. The government provides an interest subvention of 2% for loans up to ₹3 lakh to banks, provided they disburse short-term loans at 7%.
In the 2018-19 Union Budget, the government had said it would extend the facilities of Kisan Credit Card (KCC) to animal husbandry farmers and fisheries to help them meet their working capital requirements.
“In pursuance of the said budget announcement the matter has been examined, and in consultation with all stakeholders, it has been decided to extend the KCC facility for working capital requirement for activities related to animal husbandry and fisheries," a Reserve Bank of India (RBI) notification said on 4 February, 2019.
According to Nabard’s FY19 annual report, there are 70 million active Kisan Credit Cards in India, which according to Nabard “implies that nearly half of the farmers are still out of the ambit of institutional credit system".
“In order to bring all farmers within the KCC fold, the government, in Interim Budget for 2019–20, has announced a comprehensive KCC drive with a simplified application form to widen the coverage of the scheme," Nabard said it the annual report.
Meanwhile, Sitharaman also said on Thursday that Nabard will extend additional refinance support of ₹30,000 crore for crop loan requirement of rural co-operative Banks and regional rural banks (RRBs).
“Nabard does this already and ₹90,000 crore is the annual average they spend on this scheme, and we are now putting in an additional ₹30,000 crore. This will be immediately released so that the post-harvest rabi work which is going on," said Sitharaman.
She said that 33 state cooperative banks, 351 district cooperative banks and 43 RRBs have come forward to avail of this on-tap lending and this will directly benefit small and marginal farmers.
“This will benefit 3 crore farmers," said Sitharaman. She also said that around 3 crore farmers with agricultural loans of ₹4.22 trillion availed the benefit of the three-month moratorium on loan repayments announced by the Reserve Bank of India (RBI) on 27 March. Banks have lent ₹11.57 trillion of loans for agriculture and allied activities as on 27 March, showed data from RBI. Outstanding credit to this sector grew 4.2% in FY20, as compared to 7.9% in FY19.
“Immediately, post-harvest if there are any requirements, this money will help the small and marginal farmers. Not only post-harvest rabi, but also for preparatory kharif, this will be of help. The regional rural banks and the rural cooperative banks will be the ones which will use this credit," said Sitharaman.