Schemes for Institutional Credit Schemes for Farmers

There are several government initiatives to promote institutional credit to farmers. Some of these schemes are as follows:

Interest Subvention Scheme (ISS)

Under ISS scheme, the farmers can get short term loans up to Rs. 3 Lakh at a subsidised interest rate for a period of one year. If the farmers make prompt repayment, they can also avail incentive of 3%, this effectively bringing the rate of interest to 4%. Under the same scheme:

• Kisan Credit Card holder farmers can also get “post-harvest” loans for up to 6 months at same interest rate.
• Interest subvention is provided to NABARD, Regional Rural Banks, Cooperative Banks, Public Sector Banks and scheduled Private Sector Banks for providing Short Term Credit to farmers at subsidized rate of interest.
• The expenditure is being partly funded from Krishi Kalyan Kosh.

Priority Sector Lending

RBI directives to all banks mandate the Domestic Scheduled Commercial Banks to earmark 18% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent amount of Off-Balance Sheet Exposure (OBE), whichever is higher for lending to Agriculture. Within the 18 percent target for agriculture, a sub-target of 8 % for small and marginal farmers has been fixed to help in increasing the flow of credit to small and marginal farmers. Kindly note that under PSL guidelines, a distressed farmer can seek loan to repay the non-institutional lenders also.

Kisan Credit Card (KCC) Scheme

Kisan Credit Card scheme aims to provide adequate and timely credit support from the banking system under a single window to the farmers for their cultivation and other needs.

• This scheme covers all farmers including tenant farmers, oral lessees and share croppers.
• It provides a sanction for five years which needs to be renewed every year.
• Under the revised guidelines of RBI, the scheme includes issue of smart-cum debit card.
• The loans are provided for all farm, off-farm and even non-farm activities.

Banks promote Joint Liability Groups for disbursal of credit under this scheme. RBI has advised banks to waive the margin and security money under this scheme since 2010.