Professional Documents
Culture Documents
work of the Student and is being submitted in partial fulfillment for the award of the
Open University (IGNOU). This report has not been submitted earlier either to this
University or to any other University/ Institution for the fulfillment of the requirement
of a course of study.
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ACKNOWLEDGEMENT
guide for providing me insight and guidance for this projects despite the
demand made on his precious time. Without his efforts it would have been
RAM SINGH
Student
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CONTENT
CERTIFICATE OF ORIGINALITY
ACKNOWLEDGEMENT
APPROVED SYNOPSIS
PROJECT REPORT
INTRODUCTION 4
REFERENCES 102
ANNEXURE 103
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INTRODUCTION
Agriculture plays a vital role in Indias economy. Over 58 per cent of the rural
along with fisheries and forestry, is one of the largest contributors to the Gross
Domestic Product (GDP). As per estimates by the Central Statistical Office (CSO),
the share of agriculture and allied sectors (including agriculture, livestock, forestry
and fishery) was 15.35 per cent of the Gross Value Added (GVA) during 201516 at
201112 prices.
India is the largest producer, consumer and exporter of spices and spice
products. India's fruit production has grown faster than vegetables, thus making it the
second largest fruit producer in the world. India's horticulture output, comprising
fruits, vegetables and spices, has reached to a record high of 283.5 million tonnes
(MT) in 2014-15. It ranks third in farm and agriculture outputs. Agricultural export
constitutes 10 per cent of the countrys exports and is the fourth-largest exported
principal commodity. The agro industry in India is divided into several sub segments
such as canned, dairy, processed, frozen food to fisheries, meat, poultry, and food
agriculture sector in India. It manages several other bodies, such as the National Dairy
Over the recent past, multiple factors have worked together to facilitate growth
in the agriculture sector in India. These include growth in household income and
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exports. Rising private participation in Indian agriculture, growing organic farming
and use of information technology are some of the key trends in the agriculture
industry.
production has increased marginally to 252.23 million tonnes (MT) in the 2015-16
crop year. Production of pulses is estimated at 17.06 million tonnes. With an annual
output of 146.31 MT, India is the largest producer of milk, accounting for 18.5 per
cent of the total world production. It also has the largest bovine (cattle) population.
Also India, the second-largest producer of sugar, accounts for 14 per cent of the
global output. It is the sixth-largest exporter of sugar, accounting for 2.76 per cent of
Spice exports from India are expected to reach US$ 3 billion by 201617 due
distribution networks. The spices market in India is valued at 40,000 crore (US$
5.87 billion) annually, of which the branded segment accounts for 15 per cent. In fact,
the Spices Board of India has decided to set up a spice museum at Willingdon Island
in Kochi to attract and educate tourists and seafarers about the history and growth of
Easy loans lead to more investment, production and profit. This is true even
for the agricultural sector. Since, the nation depends on this sector for food and
survival, it is vital that the government promote its growth. This is done by making
the provision of agricultural loans through various branches of both public as well as
private sector banks in India. These agricultural loans are generally provided at a
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comparatively lower rate of interest with simple terms of repayment. In 1981, the
government came out with the National Bank for Agriculture and Rural Development
Act that lead to the formation of National Bank for Agriculture and Rural
In the late 1990's, the government launched the Kisan Credit Card Scheme in
consultation with the Reserve Bank of India (RBI) and NABARD. This scheme is
It allows unlimited withdrawals and repayments. The adaptation of the Kisan Credit
Card Scheme by different banks has lead to easy availability of agricultural credit and
In addition, there are various State Co-operative Banks, which also extends different
types of loans for agriculture sector. NABARD also provides refinance to State Level
Finance Corporations/ State Co-operatives/ Banks etc., against their loans granted to
agriculture sector.
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OBJECTIVES AND RESEARCH METHODOLOGY
Rationale for the Study: The detailed characteristics of loans/ financing to farmers/
agriculture sector being offered by various banks and financial institutions in India,
more precisely in Uttar Pradesh (UP) need to be studied and their impact analyzed.
Further, the expected financial viability and risks involved in such loans/ financing to
farmers/ agriculture sector and possible measures required to make the same more
attractive.
3. To find out the expected financial viability and risks involved in such loans/
Research Methodology: The research design for the project was of Exploratory cum
Descriptive type.
Primary Data: The primary data was collected through structured questionnaire to the
banks and financial institutions and interviews/ discussions with the officials of different
banks (both public as well as private sector banks) and financial institutions in UP.
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Secondary Data: The secondary data was collected through:
Journals
Text Books
Sample Size: Sample size has been kept at 100 farmers/ entrepreneurs in agriculture
sector in U.P, who have availed/ availing loans/ financing from various banks (located in
Uttar Pradesh) and 20 managers/ officials of the different banks and financial institutions
(with their branches located in U.P) who are sanctioning such loans. Thus the total
Further Primary and Secondary data were analyzed on the basis of simple
statistical method i.e. Percentage method, Pie-Diagrams, bar charts/ graphs, etc.
The information gathered was also tabulated, properly analyzed and presented in the
final report.
Contribution of the Study: From the present study it may be possible to throw light
being offered by various banks and financial institutions both in Public as well as in
Private sectors. Further, it may also be possible to find out financial viability and
various risks involved in respect of such loans/ financing to farmers/ agriculture sector
by different banks and financial institutions. The study is also expected to indicate the
sector more attractive to the users/ beneficiaries in future and corrective actions (if
any) that may be required to be taken by the various banks and financial institutions in
this regard.
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Limitations of the Project: For every research there were restrictions and limitations.
Similarly there were some limitations in my research work, which were as follows:
cases the concerned managers/ officials might not have provided information
Due to the busy time schedule there was difficulty in taking the appointment
Time was the biggest constraint. It was difficult to get the questionnaires filled
There were some people who might have different views so they might have
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INDIAN AGRICULTURE SECTOR AN OVERVIEW
Agriculture plays a vital role in Indias economy. Over 58 per cent of the rural
along with fisheries and forestry, is one of the largest contributors to the Gross
Domestic Product (GDP). As per estimates by the Central Statistics Office (CSO), the
share of agriculture and allied sectors (including agriculture, livestock, forestry and
fishery) was 15.35 per cent of the Gross Value Added (GVA) during 2015-16 at
2011-12 prices.
India is the largest producer, consumer and exporter of spices and spice
products. India's fruit production has grown faster than vegetables, making it the
second largest fruit producer in the world. India's horticulture output, comprising
fruits, vegetables and spices, is estimated to be 283.4 million tonnes (MT) in 2015-16
after the third advanced estimate. It ranks third in farm and agriculture outputs.
Agricultural export constitutes 10 per cent of the countrys exports and is the fourth-
largest exported principal commodity. The agro industry in India is divided into
several sub segments such as canned, dairy, processed, frozen food to fisheries, meat,
poultry, and food grains. The Department of Agriculture and Cooperation under the
the agriculture sector in India. It manages several other bodies, such as the National
Market Size: Over the recent past, multiple factors have worked together to facilitate
growth in the agriculture sector in India. These include growth in household income
and consumption, expansion in the food processing sector and increase in agricultural
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10
and use of information technology are some of the key trends in the agriculture
industry.
As per the 3rd Advance Estimates, India's food grain production has increased
marginally to 252.23 million tonnes (MT) in the 2015-16 crop year. Production of
pulses is estimated at 17.06 million tonnes. With an annual output of 146.31 MT,
India is the largest producer of milk, accounting for 18.5 per cent of the total world
production. It also has the largest bovine population. India, the second-largest
producer of sugar, accounts for 14 per cent of the global output. It is the sixth-largest
exporter of sugar, accounting for 2.76 per cent of the global exports. India is a leading
country in coconut production and productivity in the world, with annual production
of 2,044 crores coconuts and the productivity of 10,345 coconuts per hectare as on
2015-16. Spice exports from India are expected to reach US$ 3 billion by 201617
strong distribution networks. The spices market in India is valued at 40,000 crore
(US$ 5.87 billion) annually, of which the branded segment accounts for 15 per cent.
In fact, the Spices Board of India has decided to set up a spice museum at Willingdon
Island in Kochi to attract and educate tourists and seafarers about the history and
reach US$ 6.3 billion by 2020 with domestic demand growing at 6.5 per cent per
Investments: Several players have invested in the agricultural sector in India, mainly
Industrial Policy and Promotion (DIPP), the Indian agricultural services and
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agricultural machinery sectors have cumulatively attracted Foreign Direct Investment
(FDI) equity inflow of about US$ 2,278.3 million from April 2000 to March 2016.
Some major investments and developments in agriculture in the recent past are as
follows:
plant seeds.
company, plans to make Andhra Pradesh a hub for its agricultural business
operations.
Mahindra and Mahindra Limited has acquired 35 per cent stake in a Finnish
combine harvesters manufacturer, Sampo Roselnew Oy, for US$ 20.46 million
and will jointly focus on the combine harvester business in Asia, Africa and
Semi Arid Tropics)s incubation arm is looking to set up a .100 crores (US$
Mahindra & Mahindra (M&M), Indias leading tractor and utility vehicle
manufacturer, announced its entry into pulses retailing under the brand
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NuPro. Going forward, the company plans to foray into e-retailing and sale
of dairy products.
Group, raised US$ 100 million for the first close of its second fund India
Agri Business Fund II. The fund plans to invest US$ 1517 million in 1012
companies.
Oman India Joint Investment Fund (OIJIF), a joint venture (JV) between the
State Bank of India (SBI) and State General Reserve Fund (SGRF), invested
agrochemicals company.
Government of India, in its Budget 201617, planned several steps for the sustainable
agriculture and increase farmers welfare such as 2.85 million hectares to be brought
under irrigation, 287,000 crore (US$ 42.11 billion) grant in aid to be given to Gram
Panchayats and municipalities and 100 per cent village electrification targeted by May
01, 2018. The government has set an ambitious target of producing a record 270.1 MT
of food grains in 2016-17, 7 per cent higher than the 252.23 MT of production
estimated for 2015-16. The Government of India has started work on 99 major and
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medium irrigation projects, slated to be completed by 2019. These projects are
expected to bring 7.6 million hectares of land under irrigation in some of the most
The Government of India has already taken steps to address two major factors
(soil and water) critical to improve agriculture production. Steps have been taken to
improve soil fertility on a sustainable basis through the soil health card scheme and to
support the organic farming scheme Paramparagat Krishi Vikas Yojana. Other steps
scheme; enhanced water efficiency through `Per Drop More Crop scheme; continued
(MGNREGA) and the creation of a unified national agriculture market to boost the
incomes of farmers.
watershed development and Pradhan Mantri Krishi Sinchai Yojana; thus, it allocated
a sum of 5,300 crore (US$ 777.6 million) for it. It urged the states to focus on this
key sector. The state governments are compelled to allocate adequate funds to
develop the agriculture sector, take measures to achieve the targeted agricultural
growth rate and address the problems of farmers. The Department of Agriculture and
Cooperation under the Ministry of Agriculture, Government of India, has entered into
Education (DARE) and the Department of Animal Husbandry, Dairying & Fisheries
MOUs/ Agreements with other countries, taking the number of partnerships with
other countries to 63. These agreements are expected to provide better agricultural
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facilities in areas such as research and development, capacity building, germ-plasm
protection, animal husbandry, dairy and fisheries. The agreements are expected to
development of the country, the Government of India adopted several initiatives and
billion) for the Rural Infrastructure Development Fund (RIFD), 1,500 crores (US$
220 million) for the long-term rural credit fund, 45,000 crores (US$ 6.60 billion) for
the short-term cooperative rural credit finance fund and 25,000 crores (US$ 3.67
billion) for the short-term Regional rural bank (RRB) refinance fund. It also marked
an ambitious target of 8.5 lakh crores (US$ 124.71 billion) of agriculture credit
during 201516. Some of the recent major government initiatives in the agriculture
Prime Minister has unveiled the operational guidelines for the Pradhan Mantri
Fasal Bima Yojana which aims to provide farmers with crop insurance facility.
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Minister of Power, Coal, New and Renewable Energy has announced that
The new crop insurance scheme for farmers 'Bhartiya Krishi Bima Yojana'
aims to cover 50 per cent of the farmers under the scheme in the next two to
three years,
11.88 billion) over the next three years to complete ongoing irrigation projects
and also undertake two new projects for lifting water from the Godavari and
Krishna river.
with a financial outlay of 221 crores (US$ 32.42 million) to boost milk
segments with potential for growth, and work towards doubling farm incomes
by 2022.
The Government of India has allocated 200 crores (US$ 29.9 million) for
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country, thereby creating a National Agriculture Market (NAM) in July 2015
infrastructure such as irrigation facilities, warehousing and cold storage. Factors such
as reduced transaction costs and time, improved port gate management and better
fiscal incentives would contribute to the agriculture sectors growth. Furthermore, the
growing use of genetically modified crops will likely improve the yield for Indian
farmers.
case of normal monsoon during the June-September period. The 12th Five-Year Plan
estimates the food grains storage capacity to expand to 35 MT. Also, a 4 per cent
growth would help restructure the agriculture sector in India in the next few years.
are various departments/ organizations under both Government of India and State
Governments, which have been created for aiding development in Agriculture sector.
The broad functions and major schemes of some of these departments/ organization
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responsible for formulation and implementation of national policies and programmes
inputs and services such as fertilizers, seeds, pesticides, agricultural implements and
also provides agricultural credit, crop insurance and ensures remunerative returns to
wide range of statistical and economic data relating to agriculture, required for
calamities such as, flood, drought, cyclone, etc. It also participates in activities of
divisions and a 'Technology Mission on Oilseeds, Pulses and Maize'. It has 4 attached
addition, two authorities, namely, the 'Protection of Plant Varieties and Farmers
Rights Authority' and the 'National Rain-fed Area Authority' have been set up.
Besides, the Department essentially supplements and complements the efforts being
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administering the 'Crop Insurance Scheme' to provide relief to the farmers in
laying down Minimum Support Prices (MSP's) for certain key agricultural
farmers;
measures;
community;
developing suitable strategies for rain-fed farming through, inter alia, peoples
and the promotion of a farming system approach for augmenting income and
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Federation of India Ltd (NAFED)' and the 'National Cooperative Union of
Government responsible for developing a strong and vibrant food processing sector. It
has been set up with a view to create increased job opportunities in rural areas, enable
the farmers to reap benefit from modern technology, create surplus for exports and
The MOFPI acts as a catalyst and facilitator for attracting domestic & foreign
processes applications for foreign collaborations, Export Oriented Units (EOUs), etc.
and assists/ guides prospective entrepreneur in their endeavors. The subjects being
Dairy products;
Fish processing;
(including cocoa processing and chocolate), malt extract, protein isolate, high
and timely distribution of agriculture inputs specially seeds, fertilizers, subsidy, credit
etc. along with support service through soil testing, soil conservations, water
Major Policy Initiatives: Several significant initiatives have been taken in recent
Bharat Nirman.
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National Rural Health Mission.
agriculture.
The Protection of Plant Variety and Farmers Right Act, 2001 (PPVFR Act).
States to increase the share of investment in agriculture in their State plans. It aims at
achieving the 4 per cent annual growth in the agriculture sector during the Eleventh
Five Year Plan period by ensuring a holistic development of agriculture and allied
sectors. It is a State Plan Scheme and the eligibility for assistance under the scheme
depends upon the amount provided in the State budgets for agriculture and allied
sectors, over and above the baseline percentage expenditure incurred on agriculture
and allied sectors. The funds under the RKVY are to be provided to the States as 100
per cent grant by the Central Government. The main objectives of the schemes are as
under:
sectors.
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Provide flexibility and autonomy to the States in planning and executing
Ensure the preparation of plans for the districts and the States based on agro-
Achieve the goal of reducing the yield gaps in important crops, through
focused interventions.
Status of Release of fund for RKVY during 2016-17: The status (as on 27.09.2016)
of release of funds (Central Government share) for Rashtriya Krishi Vikas Yojana
Agriculture, Government of India for some major states (including UP) is given
below:
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b) National Food Security Mission (NFSM): It is a centrally-sponsored scheme,
launched with the objective of increasing the production of rice, wheat and pulses by
10, 8 and 2 million tonnes, respectively, over the benchmark levels of production, by
the end of the Eleventh Five Year Plan period. The Mission aims at increasing food
grains production of the above crops through area expansion and productivity
c) National Policy for Farmers, 2007: Government of India has approved the
National Policy for Farmers, 2007 taking into account the recommendations of the
National Commission on Farmers and after consulting the State Governments. The
National Policy for Farmers, among other things, has provided for a holistic approach
The primary focus of this policy is on farmer defined holistically and not
Agriculture Policy. The objective is, inter alia, to improve the economic viability of
farming through substantially improving net income of farmers. Needless to say, there
improvement of land, water and support services apart from provisions of appropriate
The major goals of the National Policy for Farmers are to:
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Protect and improve land, water, bio-diversity and genetic resources essential
Strengthen the bio-security of crops, farm animals, fish and forest trees for
safeguarding the livelihood and income security of farmer families and the
income.
Provide for suitable risk management measures for adequate and timely
compensation to farmers.
Mainstream the human and gender dimension in all farm policies and
programmes.
India and to ensure nutrition security at the level of every child, woman and
man.
Introduce measures which can help attract and retain youths in farming and
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Make India a global outsourcing hub in the production and supply of the
(ICT).
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UTTAR PRADESH AGRICULTURE POLICY- 2013
The State Agriculture Policy- 2005 for Uttar Pradesh envisaged 4 per cent
growth rate in the agriculture sector. To achieve this, the Agriculture Policy
called Sapt Kranti namely, extension, irrigation and water management, soil
diversification. In Eleventh Five year plan, the state could achieve only 3.0 per cent
growth against the planned 4.0 per cent for agriculture sector. Since the
commencement of the existing agriculture policy, there has been a drastic change in
chemicals and increase in consumerism has led to air, water, soil and noise
management and processing facilities in the state and reduced economic returns,
particularly from small land holdings. Farmers are forced to migrate to urban areas in
inclusion of agriculture in the World Trade agreement, if necessary steps are not
initiated for making it a profitable venture by ensuring quality produce at low cost of
production, the situation of rural areas may become worse in the near future. The
changes in climatic conditions are also becoming a serious concern for agriculture.
There is partial scope for expansion of area under cultivation because of the limited
area available; however the quality of production can be increased through efficient
conventional resources will not only reduce the burden on conventional energy
sources but also improve the quality and productivity of agricultural produce, which
development in the state, it has become imperative to make the necessary changes in
the present Agriculture Policy keeping in view the future challenges of the state.
Hence, the Revised Agriculture Policy of Uttar Pradesh - 2013 has been announced
by the State Government of UP, the major highlights of which are given below.
Vision:
Transforming the state into a Granary of the Nation by ensuring food and
nutritional security and to improve the quality of village life with inclusive and
sustainable growth
Mission:
marketing.
Objectives:
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To increase the income of farmers through agricultural diversification towards
high value activities, while retaining the core-competence in area of food and
nutritional security.
Strategies:
Challenges Ahead:
To ensure food and nutritional security to the state population and increase the
To improve the quality of crop production and reduce the cost of production of
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To ensure clean and pollution free environment in order to maintain the
ecological balance.
Proposed Interventions:
To achieve the envisaged growth rate during the XII Five Year Plan and thereafter
enhancing input use efficiency and popularizing indigenous, cost effective and
will receive a major thrust in the efforts for diversifying agriculture, increasing
animal protein availability in the food basket and for generating marketable
surpluses.
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The regionalization of agricultural research on all 20 new agro-ecological
partnership (PPP) across agricultural supply chain for linking the farmers with
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FINANCING IN AGRICULTURE SECTOR
may apply for loans to buy inputs for the cultivation of food grain crops as well as for
There are also special loans to finance the purchase of agricultural machinery such as
tractors, harvesters and trucks. Construction of biogas plants and irrigation systems as
well as the purchase of agricultural land may also be financed through special types of
agricultural finance.
Agriculture sector, in the form of working capital or crop processing loans to the
farmers, loans for major investments and working capital to the entrepreneurs of agro
follows: National Bank for Agriculture and Rural Development (NABARD), various
State Agricultural Cooperatives, Public and Private sector banks, etc. Here is some
information about the kind of agricultural credit and loans provided by public sector
banks/institutions in India.
was set up in 1982 to implement the National Bank for Agriculture and Rural
industries, cottage industries, handicrafts and other rural crafts. It is also responsible
for allied economic activities in rural areas and securing the prosperity of rural areas.
NABARD operates through 28 Regional Offices and 336 District Offices located
This involves framing policy and guidelines for rural financial institutions, providing
annually for all districts and monitoring the flow of ground level rural credit.
Regional Rural Banks (RRBs), cooperative banks (other than urban/ primary
cooperative banks) and State Cooperative Agriculture and Rural Development Banks
(SCARDBs).
requirements.
3. Farm Ownership Loans: These include loans for buying agriculture or farming
fisheries that qualify under the direction of Congress. A qualified program is eligible
for up to 80 percent financing through a direct loan program. This loan program is
government for loss of crop, crop damage, whether based agriculture subsidy etc.
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State bank of India is a nationalized bank which channelizes all governmental
schemes to farmers. Various banks in India provide different crop loans, Kisan Credit
Cards (KCC), agriculture insurance schemes. Agricultural schemes for farmers are as
follows.
Loan against Warehouse Receipts: farmer can get loans upto 70 per cent of
Kisan Credit Card Scheme: The Kisan Credit Card is a unique scheme for
farmers through which they can draw a cash loan for crop production as well
as domestic needs from the card-issuing branch within the sanctioned limit.
permissible loan limit will be 50 per cent of the value of land or 5 times the
Minor Irrigation Scheme: loans provided for digging new wells (open/ bore
Broiler plus Scheme: scheme for construction of poultry shed, feeding room
mango, chikoo, grapes, pomegranate, apple etc. Also include loans for
Reserve bank of India released circular regarding loans in India which states
that processing fee for agriculture loans should not be exceeding 1 per cent of the
gross loan amount and processing fee should not be included in the margin cap or the
interest cap of 26 per cent. Agriculture Loans are either direct or indirect. Direct
agriculture loans include loans to individual farmers [including Self Help Groups
(SHGs) or Joint Liability Groups (JLGs), i.e. groups of individual farmers, provided
banks maintain disaggregated data on such loans], directly engaged in Agriculture and
Allied Activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping and
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farmers directly engaged in Agriculture and Allied Activities, viz., dairy, fishery,
schedule charges for the same are 200 per request. Late payment penalty for KGC
types varies from 1.33 per cent to 2 per cent p.m. on overdue payment. Supervision
Processing fee of Agriculture term loan from JK bank 0.05 per cent of the amount
charges (loan upto 25000) to 900 (Loan up to 3 lakh). Handling charges differ
from nil to 100. Mortgage charges vary from no charges to 30000. However
Processing fee of agriculture loan from ICICI bank is up to 4 per cent of the loan
amount. Late payment penalty is 2 per cent per month on unpaid installment.
Processing fee of agriculture loan in rural from Vijaya bank ranges from nil (
25000) to 0.16 per cent i.e. 102 ( 25000 to 2 lakh). There is no processing fee for
lakh.
There are no processing and documentation charges for Kisan Credit Card-
Central Bank of India and no collateral security for loan up to 1 lakh. Government
of India has exempted farmers from paying stamp duty on agriculture loan up to 5
lakhs. Easy loans lead to more investment, production and profit. This is true even for
the agricultural sector. Since, the nation depends on this sector for food and survival,
it is vital that the government promote its growth. This is done through the provision
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of agricultural loans to farmers through branches of the various public and private
The major types of loans/ financing facilities are being provided to Agriculture
sector by different public sector banks in India. Out of the various loan schemes of
different public sector banks for agriculture sector, the salient features of major
schemes of State Bank of India (SBI) and United Bank of India (UBI) [which are
quite active in the agriculture sector of UP] are discussed below in brief.
The State Bank of India (SBI) provides number of financing/ loan facilities for
land development and reclamation, digging of wells, tube wells and irrigation
products, finance to agri-input dealers, allied activities like dairy , fisheries, poultry,
warehouse receipts, loans against produce stored by the farmer at his own premises,
loans against book debts of Arthias, mulberry cultivation, rearing of silk worms and
grainages. In fact State Bank of India (SBI) can cover any other agricultural related
activities undertaken.
Purpose: Bank extends hassle free finance to farmers / agriculturists against Gold
Ornaments / gold wares to increase their liquidity to meet crop production expenses,
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Eligibility: Any person engaged in agriculture or allied activities as well as persons
Quantum of Loan: Upto 70 per cent of the value of the ornaments .Value will be as
Credit / Overdraft: Like Kisan Credit Card (KCC), it is a running account for a
period of 3 years.
Demand Loan / Term Loan: The repayment period of the loan should be fixed so as
to coincide with the harvesting and marketing season / generation of income from the
activity, allowing 2 to 3 months time after harvesting to market the produce and
realize the proceeds. However, the total period will not generally exceed one year
from the disbursement of the loan in the case of short-term loan / production credit
How to apply for this loan: Contact your nearest Branch engaged in Agricultural
advance.
Purpose: To provide timely and adequate credit to farmers to meet their production
Agricultural borrowers having good track record for the last 2 years (i.e.,
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Creditworthy new borrowers can also be financed.
Loan amount: Loan amount is based on operational land holding, cropping pattern
and ancillary and contingency needs of the farmer for the full year. 100 per cent of the
cultivation cost available as loan upto 50000 and 85 per cent of the cost as loan
above 50000. Expenses to meet important ancillary activities to production can also
be financed in addition to the above the total limit is inclusive of 20 per cent of
production credit, which includes crop production expenses and working capital for
Disbursement of the Loan: As per the cultivation requirements of the crop, the loan
Security:
[*For loans up to 1 lac to farmers having legal ownership of agricultural lands with good track record
for last 2 years, no collateral is required]
How do customer repay: It is a revolving cash credit limit with any number of
How to apply for the loan: You may contact our nearest braches engaged in
Purpose:
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To offer the facility of loan against the stocks stored in farm houses, in
1. All non-defaulter borrowers of our branches, who can store the produce either
2. Crop loan borrowers of other Banks and also Non-Borrower Farmers, who
Loan amount: 60 per cent to 80 per cent of value of produces depending upon the
Documents you need to produce: Stock statement for valuation and evidence of
warehouse.
Security:
Collateral: Mortgage / Charge over Land or Third Party guarantee for loans above
50,000.
Disbursement: After liquidating the crop loan, surplus will be disbursed in cash.
How to repay?
Loan has to be repaid within a maximum period of 12 months depending upon the
crop.
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How to apply for this loan: The customer needs to contact his/ her Bank Branch
KGC is a general-purpose loan meant for meeting credit needs of farmers for
like Childrens education, marriage, medical expenses etc will be included to the
Farmers with excellent repayment record for at least past 2 years, new farmers with
sizeable deposits with our branches for 2 years, .good borrowers with other banks,
farmers who have closed accounts are eligible for this loan.
Loan amount: Loan amount is fixed on the basis of Five times the annual farm
income or 50 per cent of the value of land (to be) mortgaged as collateral security,
Documents you need to provide: Land records, other than that is already given to
Security:
depending on the harvest of the crops or the liquidity created by the agriculture
activity undertaken with a maximum of 6 -7 years However, the limits availed for
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setting up of Horticultural Orchards can be repaid over a period of 9 years from the
date of sanction.
How to apply for this loan: You may contact our nearest branch or talk to the
marketing officers.
animal husbandry, forestry, dairy, veterinary, poultry, Pisciculture and other activities.
List of Ventures:
6. Micro propagation through plant tissue culture lab & hardening units.
8. Setting up apiary (bee keeping) & Honey, Bee Products, processing of units.
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12. Provision of livestock health cover, setting up veterinary dispensaries &
13. Setting up of information technology kiosks in rural areas for access to various
16. Setting up of cool chain from the farm level onwards (group activity).
17. Post harvest management centers for sorting, grading, standardization, storage
and Packaging.
20. Rural marketing dealership of farm inputs and outputs. Any combination of 2
or more above viable activities along with any other economically viable
Loan amount:
group consists of 5 or more persons, all except one of them would have to be
agriculture graduate trained under the scheme and the remaining could be non-agri
Loan amount for loans upto 5.00 lakhs 100 per cent Loans above 5 lakhs up to 85
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Subsidy: Credit linked capital subsidy @ 25 per cent of the capital cost of the project
funded through bank loan would be eligible. This subsidy would be 33.33 per cent in
respect of borrowers belonging to SC, ST, women and other disadvantaged sections
and those from North-Eastern and Hill States. In addition to the above subsidy, full
interest subsidy would be eligible for the first two years of the project. The capital
subsidy will be back-ended with minimum 3 years lock-in period. The interest
Security:
How to repay the loan: The loan should be repaid in 5-10 years with grace period of
maximum 2 years.
How to apply this loan: You may contact our nearest branch for the application and
Purpose: To assist Small and Marginal farmers and landless agricultural labourers for
purchase of Land, who are banks existing borrowers to consolidate land holdings and
i. Small & Marginal Farmers owning less than 5 acres of unirrigated or 2.5 acres
ii. The borrowers should have a record of prompt repayment of the loan for at
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44
iii. Good borrowers of other Banks are also eligible provided they liquidate their
i. Cost of land
ii. Provision of irrigation facilities & land development (shall not exceed 50 per
Loan amount will be 85 per cent of the cost of the land, as assessed by the bank,
How to repay the loan: Max. 9-10 years beginning after the expiry of gestation
period, with half-yearly installments. Gestation period will be maximum 1 year for the
How to apply for this loan: Contact your Branch You may contact our nearest
Purpose: Agricultural term loans are sanctioned for purchase of new tractors,
National Savings Certificates (NSCs), Kisan Vikas Patras (KVPs), the Banks Fixed
Deposits, surrender value of Life Insurance Corporation (LIC) policy, gold ornaments
etc. to cover more than 60 per cent of the loan amount are eligible for the loan .The
applicants should score minimum score of 40 under the Scoring model of the bank.
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45
Loan amount: Up to 95 per cent of the cost of the Tractor, trailer and accessories
(Depend on the scores in the scoring model). The cost includes the Registration
charges and insurance premium not exceeding 15,000. Additional loan equal to 10
per cent of tractor loan for repairs may be provided for at the time of sanction. Bank
will finance only for those models of tractors which have completed the commercial
test from organizations viz. Central Farm Machinery Training and Testing Institute
Security:
cases.
Vikas Patras), Banks Fixed Deposits ,Surrender value of LIC policy etc OR
How to repay the loan: Within a maximum period of 9 years, including a grace
yearly, coinciding with the harvesting and marketing period of the crops proposed to
be grown by you
How to apply for this loan: You may contact our nearest branch or talk to the
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46
H. Financing of Second Hand/ Used Tractors Scheme by SBI:
Purpose: Loans provided for the purchase of second hand tractors refurbished by
Mahindra & Mahindra and Tractors and Farm Equipments Limited (TAFE), Tractors
Individual farmer or a group of farmers not exceeding three in number (as co-
Loan amount: Upto 85 per cent of the cost. The cost will be based on the price fixed
by the company for each tractor after refurbishing. The overall maximum limit will be
2.50 lakhs including the cost of implements. The implements purchased shall be
new.
Security:
How to repay the loan: The loan amount including interest shall be repayable in
repayment of loan amount should be completed before the expiry of 9 years from the
one year.
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47
How to apply for this loan: The customer may contact our nearest branch or talk to
Who is eligible?
Loan Amount: Up to 90 per cent on the total cost of power tiller plus accessories.
Security:
b. For loans above 50,000 and upto 2.00 lakhs: Hypothecation of Power tiller,
accessories, implements and trailer purchased out of Banks finance and mortgage on
land/ One third party guarantee, good for the amount involved or any other acceptable
collateral security like NSCs, Banks own term deposits, Kisan Vikas Patras, Indira
Vikas Patras, gold, urban property, surrender value of LIC Policy; the value of it
How to repay the loan: Repayment will be half yearly/ yearly installments with the
How to apply for this loan: The customer may contact our nearest branch or talk to
Purpose: Finance is given for the purpose of combined harvesters'. Makes in the
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48
Who are eligible?
1. Farmers who are in a position to operate the Harvester successfully and owning
minimum of 8 acres of irrigated land (corresponding acreage for other types of land).
2. Farmers owning lesser acreage than that prescribed above, are also eligible for
availing combine harvester loans provided they could operate the harvesters
additional collateral security like national Savings Certificates (NSCs), Bank Fixed
Deposits, Life Insurance Corporation (LIC) policies urban property etc to the value of
irrigated land (corresponding acreage for other types of land). They should own a
tractor of not less than 50 Horse Power (HP). Farmers owning lesser acreage than that
prescribed above, are also eligible for availing combine harvester loans provided they
could operate the harvesters successfully and generate sufficient income, additionally
they should provide additional collateral security like NSCs, Bank Fixed Deposits,
urban property etc the value of at least 50 per cent of the loan amount
Loan amount: Up to 85 per cent of the cost of combine harvester and accessories.
Security:
2. Mortgage of land/buildings
How do the customer repay: Repayment of the loan will be in Quarterly/ half
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AND a maximum period of residual economic life of the tractor owned which is
assumed as 9 years.
How to apply for this loan: The customer may contact SBIs nearest branch or talk
(1) Individual farmers who are members of the milk procuring societies or located on
milk route.
(3) Individual dairy unit having less than 10 animal - should own minimum 0.25 acre
of land for every 5 animals for growing fodder and be in a position to procure the
(4) Individual dairy unit having 10 animals and above - should own or lease a
minimum of one acre of land for cultivation of fodder for every 5 animals.
Other terms:
Only buffaloes producing more than 7 liters of milk per day and cows
Animals in first and second lactation alone are eligible for finance
Loan Amount: 100 per cent of the cost for loan is up to 50000 and 90 per cent of
the cost for loan above 50000 with a maximum of 5 lakh as a term loan.
Working Capital: A working capital @ 2500 per animal per year may be
sanctioned for purchase of feed, fodder and medicine along with the term loan.
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Security: Hypothecation of assets created out of bank finance for loans up to 1.00
lakh. For loans Over 1 lakh - Mortgage of landed property (or) third party guarantee
Worth for loan amount (or) group guarantee of other 2 dairy farmers.
How do the customer repay: The loan should be repaid in monthly installments
How to apply for this loan: The customer may contact our nearest branch or talk to
Purpose: This scheme is to provide short term production and consumption credit to
meet Genuine requirements of tenant farmers, share croppers and oral lessees who do
not have recorded land records and where there is no written undertaking/ document
lessee. It will help increase their income from agriculture production activities.
Landless labourers, share croppers, tenant farmers, oral lessees, (also covering
oral tenants and small farmers) having no recorded land records are eligible .They
should have a permanent residential address proof & have been residing at the lace for
at least past 2 years. Migratory tillers are not eligible under the scheme.
Loan amount:
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Security: Nil
How do the Customer repay: The customer should route the sale proceeds through
How to apply for this loan: The customer can contact SBIs nearest branch or even
Holding a valid license from the concerned State Department of Industries for
Who have posted profits during the past two years of operation is eligible to
Loan amount: 60 per cent of the value of the receivables minimum 2.00 lakhs. No
upper limit.
Security:
(2) Equitable mortgage of residential/ commercial property worth 1.5 times of the
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How to repay the loan?
Loan can be liquidated within a maximum period of 6 months for each crop season
The customer may contact his/ her nearest branch or even talk to the marketing
Purpose: Loans for development of fruit orchards like mango, chikoo, Grapes,
pomegranate, apple, etc., as well as short term crops like banana, pineapple, Flowers
Loan amount:
Up to 50000 100 per cent of the cost of the asset / project cost
Up to 85 per cent of the asset / project are given as
Above 50000
loan.
For Short term loans, loans are given under SBI crop loan / Kisan Credit Card (KCC)
schemes.
Documents you need to provide: For Orchard development the customer needs to
Land records.
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Disbursement of the loan: Generally disbursements are made directly to the
suppliers. Cultivation expenses are released in stages as per the schedule set in your
proposal.
Security:
The loan repayment starts after the completion of the gestation period varying from 4
to 7 years for different crops. Repayment commences from the time the crop gives
economic yield and is linked to the income generation of each crop every year and
The customer can contact SBIs nearest branch or even talk to the marketing officers
OF INDIA (UBI):
the eastern region amongst different banks. The different financing/ loan facilities
being provided by the United Bank of India (UBI) for Agriculture sector in various
1. Objective: The scheme aims at providing adequate and timely credit for the
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54
activities under single window, with flexible and simplified procedure, adopting
whole farm approach, including the short-term credit needs and a reasonable
component for consumption needs, through Kisan Credit Card (KCC) including
3. Eligibility
i. Short term crop loans to farmers those who are owner cultivators/ share-
croppers/ bargadars.
ii. KCC can also be issued for meeting the short term production need/working
capital needs in respect of the allied activities like poultry, dairy, Pisciculture,
iii. KCC schemes also cover the term credits for agriculture and allied activities.
iv. KCC is issued to individual borrower only on merit and not to corporate body
v. Illiterate and blind persons intending to avail of this facility may be allowed after
4. Purpose: It is intended that both term as well as short term/working capital credit
facilities will be provided through single Kisan Credit Card. The passbook provided
to KCC holders are to be divided into three separate portions for maintaining the
records of: a) Short term credit / crop loans, b) working capital credit for activities
kept distinct.
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55
5. Credit limit
i. Minimum credit limit should be 25000 and maximum 10.00 lakhs in the
form of working capital and term loan. However, in deserving cases the upper
limit may be enhanced above 10.00 lakhs which has to be disposed of under
ii. Working capital will be in the form of revolving cash credit and any number of
flexibility to the borrower in deciding the appropriate time for withdrawal of the
sanctioned limit and reducing his loan and interest burden. (For ST Crop Loan,
iii. Term Loan to be sanctioned for purchase of agricultural implements, plant and
storage facilities.
iv. While fixing the limit and sub-limits, entire year's production credit requirement
v. Credit limit is fixed on the basis of land holding under cultivation, cropping
appropriate scale of finance for the crop after getting permission from the
vi. The branch should also fix season-wise sub-limits within the overall credit limit.
vii. Contingency expenses, including consumption loan should not exceed 10 per
cent of the ST loan sub-limit subject to maximum 10,000 till harvesting the
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viii. Repayment of loan availed from non-institutional lenders by the farmer
6. Validity: The credit card will be valid for 5-7 years subject to annual review.
Reserve Bank of India (RBI)/ National Bank for Agriculture and Rural Development
50,000.
applicable.
8. Interest: As per directive of RBI/ Bank issued from time to time. The rate of
interest is subject to change from time to time as per Head Office (HO) Instruction.
payable in the Revolving Cash Credit account on the minimum credit balance, if any,
form for each purpose is to be obtained. But, while fixing the limit, the sub-limit is to
11. Documents
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iii. Letter of continuity
v. If the sanctioned limit is more than 50,000 mortgage of land/or third party
12. Repayment: The short term credit/ crop loan as well as working capital for
agriculture and allied activities would continue to be provided as revolving cash credit
repayable within 12 months. However, the term loan component will be repayable
13. Crop Insurance under NAIS: All Crop loans under KCC (Kisan Credit Card)
b) Oil seeds
c) Sugar cane, cotton and potato (annual commercial / annual horticulture crops)
All farmers both loanee and non-loanee farmers growing the above notified crops in
the notified areas are eligible for insurance coverage. In each district there is a Nodal
Branch for receiving premium for insurance coverage and remitting the premium to
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58
14. Personal Accident Insurance Scheme (PAIS): The coverage under PAIS is also
compulsory for all KCC holders. The premium payable under the scheme is to be
shared by the issuing Branch and the KCC holder in the ratio of 2:1.
The premium payable for a one-year policy is 15 while the same for a three
year policy will be 45 only. The insurance coverage will be from the date of receipt
wheelers, to be used as transport equipment for carrying agricultural inputs and farm
produces.
3. Eligibility: The farmers owning lands or no land but having driving license will be
5. Margin: 15 per cent of the cost of vehicle, Margin may be reduced to 5 per cent in
cases where additional security in the form of bank's own term deposit/NSC/KVP is
6. Security:
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ii. For loans above 50,000 Mortgage of land or third party
guarantee acceptable to the Bank / Lien on term deposit / NSC / KVP (10 per cent).
7. Rate of interest: Rates of interest is subject to change from time to time as per
H.O. Circular.
10. Documents
iii. All documents related to creation of mortgage / lien of term deposit etc.
wherever applicable. A copy of the blue book with bank's name as hypothecates and
11. Disbursement: Directly to the supplier of vehicle by way of P.O. /D.D. etc. under
1. Object / Purpose
i. Providing financial assistance for purchasing tractor and power tiller for the
purposes of tillage operations, transportation of output and inputs and custom hiring.
ii. Providing self employment to rural youth for taking up custom hiring as well as
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2. Area of operation
i. Through rural and semi urban branches within or even outside their service area.
ii. For such loan service area concept will not be applicable.
iii. The concept of 'No Objection Certificate' is dispensed with, but indebtedness of
3. Eligibility
tractor and 1.5 acre of irrigated land for power tiller. In case where financing of
tractor is 100 per cent secured by liquid security like FDs (Fixed Deposits), NSCs
etc., there will be no minimum land holding criteria, but the applicant should be a
farmer.
ii. For rural youth below 35 years of age having a valid tractor driving license and
possessing minimum 2 acres of irrigated land for tractor and 0.5 acres of irrigated
land for power tiller. He should be a non-defaulter and duly recommended by block
4. Margin: 10 per cent for farmers. However, there is no margin in case of loan up to
50,000.
reduction of 0.25 per cent is allowed if the borrower agrees to obtain a Life Insurance
Policy equal to the amount of loan. Since the Bank is acting as a Corporate Agent of
TATA AIG, borrower may be persuaded to have the policy with TATA AIG,
6. Security
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Additional : Mortgage/charge on land possessed by the applicant and/or third
7. Documents to be obtained
be done at the borrower's cost with bank's clause. Life Insurance of the borrower is
optional.
10. Financing of second hand Tractor: 2nd hand Tractors can be financed upto 90
per cent of the assessed value provided the following conditions are fulfilled:-
i. Age of the Tractor must be within 7 years from the date of original purchase.
ii. Valuation of the tractor done by any automobile engineer or any other organization
Objective: To provide uninterrupted, quick and hassle free credit with a view to
activities.
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Area of operation: All rural and semi urban branches.
Purpose: For all kinds of agricultural, allied and other productive activities with
Eligibility
i. Existing medium term farm borrowers with good track record for the last 3
the last 3 years can apply himself (herself) / recommend the loan proposals
Quantum of loan:
i. Maximum upto the amount of the original loan repaid by the existing borrower
iii. Need based finance depending upon the scheme applied / recommended /
Margin:
Rate of interest: As per Reserve Bank of India (RBI)/ Head Office (HO) guidelines
issued time to time and as applicable to priority sector advances. However, concession
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a) 0.50 per cent in case of women family members
Security:
Additional:
b) For loan limit above 50,000 mortgage / charge on land or third party
guarantee.
Repayment:
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64
ii. Installments should be fixed monthly, quarterly or half-yearly basis
commensurating with the income generation from the activity for which the
loan is granted.
Insurance: The assets created out of loan are to be insured for fire and other risks
with bank clause and to be renewed every year. However, in case of loan limit up to
10,000 for equipments and current assets insurance may be waived at the request of
Objective: The objective of the United Bhumiheen Kisan Credit Card (UBKCC) is to
provide production credit coupled with the provision of consumption credit and credit
for liquidation of loan availed from informal sector and for meeting genuine need of
the farmers who are landless tenant farmers, oral lessees, bargadars and share
croppers for availing working capital assistance for agriculture and allied activities
Eligibility:
2. Self Help Group (SHG)/Joint Liability Group of the above category of farmers.
3. Contract farmers under tie-ups with sugarcane, potato, vegetables, fruits and
horticultural crops processing units and other processing units in allied agricultural
activities.
Limit:
Out of the above limit 5000 may be utilized for investment credit purpose if
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b) Consumption loan limit not to exceed 2500.
d) Scale of finance as fixed by District Level Technical Committee (DLTC) and unit
cost fixed by National Bank for Agriculture and Rural Development (NABARD)
will be applicable.
Issue of cards and operations in the Account: As per existing guidelines under
Rate of Interest: Rate of Interest as per Head Office guidelines. Reduction of 0.25%
for satisfactory operation of the account including regular servicing of interest will be
F. United Gramin Sahaj Credit Card: In line with the Reserve Bank of India
(RBI)s decision to extend banking services to the small man under the financial
inclusion concept of Reserve Bank of India (RBI) issued as per the guidelines dated
guideline, the Bank has introduces above-named United Gramin Sahaj Credit Card
The Salient features of United Gramin Sahaj Credit Card Scheme are as under:
Objective: The scheme shall cover general credit needs of our customers in rural and
semi urban areas. The objective of the scheme is to provide hassle free credit for any
purpose to the customers based on the assessment of income/ cash flow of the
household without insisting for purpose & ensuring end use of the fund & without
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Implementation: The scheme will be implemented in all rural and semi urban
Nature of accommodation: The credit facility to be extended under the scheme will
be in the nature of revolving overdraft facility. The UGSCC holder will be entitled to
draw cash from the branch from where the limit will be sanctioned and a passbook
Eligibility: Any individual household having regular income from salary, business,
profession and any other economic activities (Farm and Non Farm activities) like
Identification: Identification of the key person of the household in whose name the
limit will be sanctioned to be made from salary certificate, book of accounts, ration
All existing defaulter loanees will be kept outside the purview of the scheme:
Branch managers are advised to utilize the services of local Post offices, schools,
Primary Health Centre, local Govt. Functionaries, Farmers' Association/ Club, well-
established community based agencies and civil society organizations for sourcing of
The limit to be fixed based on the assessment of income and cash flow of all the
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Annual Income Limit (Max)
Up to 10000 500
Above 10000 to 25,000 2,000
Above 25,000 to 50,000 5,000
Above 50,000 to 1 lakh 10,000
Above lakh to 2 lakhs 15,000
Above 2 lakhs 25,000
To begin with the Banks branch may fix lower limit. However, depending
upon the experience and the conduct of the account the limit can be enhanced as
suggested above. In this connection for annual income up to 100000 self declaration
of income by the borrower will be sufficient. However, the Branch Manager will
make appropriate assessment of income after making enquiry from the available
sources. For annual income above 100000 the borrowers are to submit necessary
Interest rate: Rate of Interest is liable to be changed from time to time as per H.O.
Objective: The objective of the "United Sahaj Rin Yojana" is to provide overdraft
facility for pursuing any income generating activities in the farm and non-farm sector
(any eligible activities). The scheme is meant for weaker section of the society under
priority sector for bringing the small traders like Pan Bidi vendors, vegetable / fish
vendors, fruit vendors, newspaper hawkers, fast food stalls, phoochka stalls, etc. The
scheme is aimed to avoid borrowing by these very small traders from private money-
Eligibility: Any individual in the age group of 18-50 yrs. belonging to BPL list and
undertaking the above-mentioned activities, and residing in the vicinity of the branch
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preferably within 1 to 1.5 km. from the Branch for proper monitoring. All existing
Limit:
For Rural & Semi Urban Branches For Urban & Metropolitan Branches
a) Initial overdraft will be for 500. a) Initial overdraft will be for 1000.
b) Subsequently the limit may be enhanced b) Subsequently the limit may be
to 3000 in 3 years subject to enhanced to 5000 in 3 years
satisfactory operation / transactions in subject to satisfactory operation /
the account. transactions in the account.
Security:
Additional: Nil
Margin: Nil
Interest: Rate of Interest is liable to be changed from time to time as per H.O.
guidelines.
Documents
a) Pronote.
b) Letter of continuity.
c) Hypothecation of goods.
group of rural poor having a common perception of need and impulse towards
common fund to be lent to its members as per group decision for meeting the
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emergent needs of the members, both for productive and consumptions purposes to
1. Objective:
i. To evolve supplementary credit strategies for meeting the credit need of the
rural poor.
iii. To build mutual trust and confidence amongst the group members as also
to 20 years. Only one person of a family either male or female can be the member of
covering people below poverty line, above poverty line or even a mixture of the two.
The defaults by a few members of Self Help Groups (SHGs) and/ or their family
members to the financing bank should not ordinarily come in the way of financing
SHGs by Bank provided the SHG is not in default to it. However, the bank loan was
not be utilized by the SHGs for financing a defaulter member to the Bank.
3. Opening of Savings Bank (SB) Account: Savings Bank (SB) account of the
registered or unregistered Self Help Groups (SHGs) is to be opened. For this purpose
a duly filled in application form should be obtained along with the following
documents:
i. A copy of the resolution passed in the meeting of the SHG signed by all
members containing the decision to open the bank account with authorization
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ii. Bye law if any, initial cash deposit of 50 may be accepted for opening of S.B.
account. The account and Pass Book should be in the name of Self Help
Group (SHG).
4. Internal lending by Self Help Group (SHG): The deposit held in Savings Bank
(SB) Account of the Self Help Group (SHG) over the minimum balance of 50 shall
be utilized for internal lending among the members. The repayment including
principal and interest shall be deposited in the SB account and further lending be
5. Assessment of Self Help Group (SHG): The Self Help Group (SHG) is required
credit.
6. Credit facility:
i. Loan should be sanctioned in the name of the Group and not in the name of
individual members.
ii. Amount of loan should be up to four times the group corpus fund. Higher
iii. Group corpus will include the balance in SB Account, outstanding balance in
the loan ledger, cash held by authorized person and any other contribution
iv. Credit facility will be in the forms of Term Loan / Cash Credit / Overdraft
obtained. The branch shall not mark lien on the deposits in SB A/c. of the SHG which
is a component of group corpus fund meant for internal lending. However, a letter of
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guarantee may be taken from all the members of the group. In case of loans to NGOs,
8. Rate of interest: Are applicable as per Head Office Circular. The Non
Governmental Organizations (NGOs) should not charge interest to the Self Help
Groups (SHGs) more than 1.5 per cent over the rate with which they borrowed from
the Bank.
1. Objective:
meet the storage need of farmers for farm produce, consumer articles and
agricultural inputs.
godowns.
2. Implementation
behalf.
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iii. The godown complex shall have easy approach road, pucca internal roads,
proper drainage, arrangements for effective control against fire, theft and also
iv. The entrepreneur must have proper license to operate such godowns under the
engineer.
vi. Average Debt Service Coverage Ratio (DSCR) should not be below 1.5 and in
Eligibility:
The project for construction of rural godown can be taken up by the following:
i. Individual v. SHGs ix. Cooperative
Societies
ii. Farmers vi. Partnership/ x. Agricultural
Proprietorship Produce Marketing
concern
iii. Group of vii. Companies xi. Marketing Board
farmers
iv. NGOs viii. Corporations xii. Agro Processing
Corporations
Repayment period: Depending upon the cash flow it may be up to 11 years including
the grace period of one year. The first annual installment will fall due after 23 months
various types of agricultural loans for farmers in the State of UP and these loans are
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ANALYSIS AND FINDINGS
Farmers; and (B) Discussions/ Interviews with the Officials of Banks/ Financial
Sample Size - 100 farmers of agriculture sector who have taken/ availed/ availing/
intended to avail loans/ financing from various banks/ financial institutions in UP (Uttar
Pradesh).
Respondents No.
Between 18 to 35 years 37
Between 35 to 45 years 33
Above 45 years 30
Between 18 to 35
Above 45 years years
30% 37%
Between 35 to 45
years
33%
It is observed that 37 per cent of respondents/ farmers belong to the age group of 18 to
35 years, followed by 33 per cent of respondents/ farmers pertaining to the age group
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of 36 to 45 years and 30 per cent of respondents/ farmers in the age group of above 45
years.
Respondents No.
Male 63
Female 37
Female
37%
Male
63%
It is found that amongst the respondents/ farmers, 63% are male and 37% are female.
Respondents No.
Yes 38
No 62
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WHETHER FARMING IS THE ONLY OCCUPATION OF
RESPONDENTS/ FARMERS
Yes
No
38%
62%
It is found that 62 per cent of respondents/ farmers are into other businesses or
works along with farming occupation and 38 per cent of respondents/ farmers depend
Q.4. For what purpose you have taken or are intending to take Agricultural
loans?
Respondents No.
Cultivation of Crops 50
Animal Husbandry 20
Horticulture 18
Purchase of Agri Machinery 8
Others 6
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PURPOSE WISE DISTRIBUTION OF AGRICULTURAL LOANS
OF FARMERS/ RESPONDENTS
Others
Purchase of Agri 6%
Machinery Cultivation of Crops
8% 50%
Horticulture
16%
Animal Husbandry
20%
agricultural loans for cultivation of crops (50), followed by loans for Animal
Husbandry (20), loans for Horticulture (16), loans for purchase of Agricultural
Q.5. Whether you are availing or intend to avail agricultural loans for assets
Respondents No.
For Assets in Home State 90
For Assets in Other States 10
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It is observed that maximum nos. of respondents (90%) are availing agricultural loans
Q.6. From which Bank/ Financial Institution you are availing/ intend to avail
Respondents No.
State Cooperatives 30
SBI 21
Public Sector Banks Other Than SBI 25
Private Sector Banks 15
Self Help Groups/ Others 9
As per the respondents the sources of availing for agriculture loans are as follows (in
decreasing order of preference): State Cooperatives (30%), Public Sector Banks other
than SBI (25%), SBI (21%), Private Sector Banks (15%), Self Help Groups/ Others
(15%).
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Q.7. When you have last availed or are expected to avail the Agriculture
Loan?
Respondents No.
Last year 29
Last 2 to 5 years 44
Current Year 24
In Near Future 2
In Near Future
2% Last year
Current Year 29%
24%
Last 2 to 5 years
45%
As per the respondents/ farmers the time of last availing or expected to avail
agricultural loans are as follows (in decreasing order of preference): Last 2 to 5 Years
(45%), Last Year (29%), Current Year (24%), In near future (2%).
Response No.
Up to 5000 86
Between 5001 and 10000 10
Above 10000 4
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APPROXIMATE AMOUNT OF EQUATED MONTHLY
INSTALLMENTS (EMI) FOR AGRICULTURAL LOANS BEING
PAID OR LIKELY TO BE PAID BY FARMERS/ RESPONDENTS
Up to Rs.5000
86%
Equated Monthly Installments (EMI) being paid or likely to be paid by farmers for
Q.9. How much processing fees/ charges you have given or are likely to give for
Response No.
Up to 1% of Loan Amount 50
Between 1% to 2% of Loan Amount 44
More Than 2% of Loan Amount 6
More Than 2% of
Loan Amount
6%
Up to 1% of Loan
Amount
Between 1% to 2% 50%
of Loan Amount
44%
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In the survey, it is found that 50 per cent of the respondents/ farmers have paid
or are likely to pay processing fees or file charges up to 1 per cent of loan amount, 44
per cent of respondents have paid or are likely to pay processing fees between 1 to 2
per cent of loan amount, while 6 per cent of respondents have paid or are likely to pay
Q. 10. Do you pay or likely to pay a flat rate of interest or interest on reducing
Response No.
Flat Rate of Interest 0
Interest on Reducing Balance 100
Interest on
Reducing Balance
100%
It is observed that all the respondents/ farmers (100%) are paying or likely to
Q.11. Whether banks/ financial institutions are insisting or likely to insist for any
Response No.
Yes 100
No 0
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WHETHER BANKS/ FINANCIAL INSTITUTIONS ARE INSISTING
FOR COLATERALS OR HYPOTHECATION OF ASSETS FOR
AGRICULTURAL LOANS
No
0%
Yes
100%
It is observed that all the respondents/ farmers (100 per cent) have said that
banks/ financial institutions are insisting or likely to insist for collateral and/ or
Q.12 Do you find the repayment programmes generally fixed by the banks/
Income level?
Response No.
Yes 13
No 87
Yes
13%
No
87%
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It is observed that only 13% of the respondents/ farmers have said that the
repayment programmes for agricultural loans being fixed by the banks/ financial
institutions are comfortable as per their income levels, but majority of respondents
Q.13. Are you satisfied with the lending or interest rates in respect of Agriculture
Response No.
Yes 11
No 89
Yes
11%
No
89%
with the lending/ interest rates being charged by banks/ financial institutions for
Q.14. Have you attended any training/ education programmes on proper use of
your area?
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Response No.
Yes 11
No 89
Yes
11%
No
89%
Institutions (FIs):
Sample Size: 20 managers/ officials of the different banks and financial institutions (FIs)
(with their branches located in Uttar Pradesh) who are sanctioning Agricultural loans
Q.1. What are the main purposes of agricultural financing/ loans being provided
Ans.: Easy loans lead to more investment, production and profit. This is true even for
the agricultural sector. Since, the nation depends on this sector for food and survival,
it is vital that the government promote its growth. This is done through the provision
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(FIs). These loans are provided at a lower rate of interest with simple terms of
Further, the Banks and Financial Institutions (FIs) accommodate the needs of
farmers including landless agricultural labourers through their rural and semi-urban
branches. There are even specialized bank branches of some banks for the
meets in villages to inform farmers about the various schemes offered by their
branches. Some banks have also set up agricultural business units and employs
Ans.: For improving access of agricultural credits to small and marginal farmers
government:
(1) The farmers from the disadvantageous sections of the farming community
awareness about various government schemes. So, the state governments should have
due concern to this aspect. In fact, some sort of incentive mechanism may be
introduced for the bank whose consumer set is constituted of more than 50 percent of
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(2) The tribal areas have less availability of the banking facilities. An effort should be
made by the banks to establish new banks branches in these areas. In fact, the
(3) The option of microfinance should be adopted and streamlined to alleviate the
plight of the marginal, small, tribal and dalit farmers. They should be linked
effectively to the Self Help Groups (SHGs). Most often, it is the lack of knowledge
about the utility of the SHGs that refrains this class of farmers in joining the SHGs.
So, these farmers should be made aware of the benefits of the SHGs through various
documentaries. The access to SHGs is expected to help the farmers especially Dalit
and Tribal farmers in enhancing their self-esteem and self- confidence at an individual
(4) Strong financial institutions should be developed for rapid financial inclusion of
marginal, small, dalit and tribal farmers. So far, the banking system has catered the
financial needs of the medium and large farmers and the prime concern of credit
delivery has been the upliftment of agriculture. But, such approach has been myopic.
Given the dominance of marginal and small farmers in overall land structure, it would
be inappropriate to leave such a vast set of farmers with inadequate attention. If the
prime goal is to enhance the growth rate of agriculture, then there is no other option
except taking care of the credit needs of the marginal, small, tribal and dalit farmers.
Once these farmers have adequate access to credit, the performance of agriculture
Q.3. As per your opinions, what are the major problems presently being faced by
the farmers in getting agricultural loans from banks and how these problems can
be minimized/ removed?
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Ans.: The major problems presently being faced by the farmers in getting agricultural
The policy makers need to simplify the procedure of agriculture credit and interest
rates for marginal and small farmers may be reduced. Regarding the problem of lack
of cooperation by bank staff, the training colleges of bank staff may provide
compulsory periodical rural oriented training to the bank staffs. Further, education
about financial knowledge (financial inclusion) to marginal and small farmers needs
like road, transport, irrigation and electricity Micro financing (bank linkage) is a right
The recovery process of loan needs to be elastic and based on reality. Fear
factor about recovery process of banks/ financial institutions amongst rural farmers
Q.4. What are the major risks in agricultural financing and how these can be
minimized?
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Ans.: Management of risk in agriculture is one of the major concerns of the decision
makers and policy planners, as risk in farm output is considered as the primary cause
for low level of farm level investments and agrarian distress. Both, in turn, have wide
from rainfall variability, market price fluctuations, credit uncertainty and adoption of
new technology.
Different sources of risk that may affect agriculture are as follows: Production
Risk, Price or Market Risk, Financial and Credit Risk, Institutional Risk, Human or
Personal Risk, Legal / Policy Risk, Resource Risk, Health Risks, Assets Risks, and
Technology Risk.
Beside above mentioned risks, there are certain other problems/ risks, which have
of loan money by farmers for purposes other than agricultural needs namely,
for social ceremonies like marriage, functions etc and sometime it is also used
for paying old debts. Apart from the above, sometimes farmers purchase
defective assets, due to which chances of loan default may increase. There is
(ii) Due to huge amount of agriculture loan work burden of bank officials also
increase. The main reason behind this is the number of accounts are more and
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accounts are of small amount. So pre sanction visit, post sanction visit,
(iii) In agriculture loan there is sometimes lot of social, political and target
pressure on bank officials, who are indirectly forced to provide loans to the
protecting the farmers. In India, these include crop insurance, rainfall insurance, farm
income insurance and a calamity relief fund. Most of these measures other than crop
adequate bank staffs/ officials for properly handling the huge amount of work
Q.5. What are the general agricultural credit policy and initiatives taken by the
Ans.: The Government of India has initiated several policy measures to improve the
policies has been on progressive institutionalization for providing timely and adequate
credit support to all farmers with particular focus on small and marginal farmers and
weaker sections of society to enable them to adopt modern technology and improved
various agriculture policies lay emphasis on augmenting credit flow at the ground
resulted in the increase in the share of institutional credits of the rural households over
the years.
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Some of the special initiatives taken by the Government of India for increasing flow
(i) Farm credit package: Government of India in its Farm Credit Package announced
in June 2004, advised banks to double credit to agriculture sector in three years, i.e.,
targets for credit to agriculture to ensure adequate credit flow to the sector. The flow
incentivise prompt repayment, in the Union Budget for 2009-10, Government of India
short term crop loans promptly and on or before due date. This was subsequently
repay their crop loans, are now extended loans at an effective interest rate of 4% p.a.
As proposed in the Union Budget 2013-14, Interest subvention scheme for short-term
crop loans to be continued and the scheme extended for crop loans borrowed from
discourage distress sale by farmers and to encourage them to store their produce in
warehousing against warehouse receipts, the benefit of interest subvention scheme has
been extended to small and marginal farmers having Kisan Credit Card (KCC) for a
further period of up to six months post harvest on the same rate as available to crop
loan against negotiable warehouse receipts for keeping their produce in warehouses.
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(iv) Collateral free loans: The limit of collateral free farm loan has been increased
calamities: Reserve Bank of India (RBI) has put in place a mechanism to address
situations arising out of natural calamities. The banks have been issued necessary
guidelines for undertaking necessary credit relief measures in the event of occurrence
of natural calamities. The guidelines contain directions to banks to ensure that the
for implementation of the relief programmes in collaboration with the State/ district
authorities.
of loans and consider moratorium period of at least one year in all cases of loans
restructuring. To enhance awareness, the banks are also required to give adequate
Further, the banks have been advised not to insist for additional collateral security for
such restructured loans. Asset classification for restructured loans will remain the
same as prevalent at the time of restructuring for a period of one year as per extant
guidelines. The relief measures initiated and undertaken are required to be reviewed
or Sub Committees of the SLBC (State Level Bankers Committee) till such time as
conditions are normalized. In addition, there has been interest subvention for loan
(vi) Kisan Credit Card (KCC) Scheme: In order to ensure that all eligible farmers
are provided with hassle free and timely credits for their agricultural operations, Kisan
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Credit Card (KCC) Scheme for farmers was introduced in 1998-99 to enable the
farmers to purchase agricultural inputs such as seeds, fertilizers, pesticides, etc. The
Kisan Credit Card (KCC) Scheme is in operation throughout the country and is
Banks). The scheme has facilitated in augmenting credit flow for agricultural
activities. The scope of the KCC has been broad-based to include term credit and
farmers, Share croppers, oral lessee and tenant farmers are eligible to be covered
under the Scheme. The KCC card holders are covered under Personal Accident
(vii) Agriculture Debt Waiver and Debt Relief Scheme (ADWDRS) 2008: To
mitigate the distress of farming community in general and small and marginal farmers
in particular and to decongest the institutional credit channels and make farmers
eligible for fresh credits, the Debt Waiver and Debt Relief Scheme (ADWDRS), 2008
was announced in the Union Budget for 2008-09. The scheme covered direct
agricultural loans disbursed (i) between 31 March 1997 and 31 March 2007 (ii)
overdue as on 31 December 2007 and (iii) remaining unpaid until 29 February 2008.
In the case of small and marginal farmers, short term production loans (subject to a
overdue were covered, while in the case of the other farmers, one time settlement was
extended under which a rebate of 25 per cent of the eligible amount was given on the
condition that the farmer repays the balance 75 per cent in three installments. The
debt waiver exercise was completed by 30th June 2008, whereas the debt relief
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(viii) National Agriculture Insurance Scheme (NAIS): The Government of India
The NAIS envisages coverage of all food crops (cereals and pulses), oilseeds,
horticultural and commercial crops. It covers all farmers, both loanees and non-
loanees, under the scheme. The premium rates vary from 1.5 per cent to 3.5 per cent
of sum assured for food crops. In the case of horticultural and commercial crops,
actuarial rates are charged. Small and marginal farmers are entitled to a subsidy of 50
percent of the premium charged and the subsidy is shared equally between the
Government of India and the States. The subsidy is to be phased out over a period of 5
Area approach- defined areas for each notified crop for widespread calamities.
Under the scheme, each state is required to reach to the level of Gram Panchayat as
Based on the questionnaire survey of farmers (as described in Section (A) above),
following major observations/ findings have been made in respect of agricultural loans
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(3) Majority of respondents/ farmers are into other businesses or works along with
farming occupation.
(4) Maximum numbers of respondents/ farmers are availing agricultural loans for
cultivation of crops, followed by loans for animal husbandry and loans for horticulture.
(5) Maximum numbers of respondents (90%) are availing agricultural loans for assets
(6) Majority of respondents/ farmers are taking agricultural loans from State
Cooperative Banks, SBI (State Bank of India) and Public Sector Banks (Other than
SBI). The general conditions and/ or procedures of sanctioning agricultural loans are
almost same in all the banks/ financial institutions (FIs). However, the numbers of
applicants for Agriculture loans are more in case of State Co-operatives rather than
banks.
(7) Majority of respondents/ farmers have availed their agricultural loans within the
(8) For most of the respondents/ farmers availing agricultural loans, the amount of
(9) The majority of farmers/ entrepreneurs who have availed agricultural loans have
(10) The interest rates for Agriculture loans may vary from time to time by different
banks. However, all respondents/ farmers like to avail interest on reducing balance
(11) All the respondents/ farmers have stated that in all cases of sanctioning of
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(12) Most of the respondents/ farmers have said that the repayment programmes for
agricultural loans being fixed by the banks/ financial institutions are not comfortable as
(13) Most of the respondents/ farmers are not satisfied with the lending/ interest rates
being charged by banks/ financial institutions for agricultural loans and have felt the
(14) Most of the respondents/ farmers have not attended any training/ education
financial institutions, thereby indicating that there is lack of such training programmes
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SUGGESTIONS AND CONCLUSIONS
farmers and discussions/ interviews with the officials of banks/ financial institutions
(as described in the previous chapter) following suggestions can be made for making
(1) The State Government needs to take special initiatives along with bankers
associations to revisit and review the agricultural loans repayment schedule being
prescribed by various banks. The same needs to be more flexible based on ground
(2) The State Government along with bankers associations also needs to put in their
efforts to reduce the present interest rates for agricultural loans to maximum possible
extent.
(3) Various banks/ financial institutions operating in the state need to arrange
periodical training/ education programmes cum loan campaigns for farmers availing/
intending to avail agricultural loans. Such training courses should also show the most
practical ways and means of how to gainfully utilize the agricultural loans as well as
timely repay the same. The different NGOs (Non Governmental Organizations) and
SHGs (Self Help Groups) operating in the state should also be actively involved in
(4) The state government agriculture department along with a team of bank officials
as well as agricultural experts/ specialists should conduct area wise/ zone wise
periodic financial surveys, so as to assess the real prevailing crop conditions and
farmers needs for finance and if necessary advise/ counsel the later for effectively
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tackling the situations. Such measure is expected to effectively address the real
financial needs of farmers and also reduce the risks for defaulting in agricultural loan
repayments. Such exercise should be conducted regularly and local gram panchayats
Broad Suggestions:
(1) Both the Central Government as well as State Governments along with NABARD
(National Bank for Agriculture & Rural Development) should take active initiative to
make all the Banks/ Financial Institutions in Agriculture sector to critically examine
their existing interest rates, facilities, repayment periods, etc., vis--vis the
convenience level of general farmers of different categories. The overall aim should
come out with a more convenient and easily acceptable and flexible terms and
conditions for various categories of such loans/ financing, since it is observed that a
major portion of Agricultural loan takers are not satisfied with the same.
(2) The promotion of the Agriculture sector in India has been an important thrust of
agricultural policy since independence though the focus of concern changed a bit with
the priorities of each five year plan. The same trend should continue in the future
(3) Agriculture plays a vital role in Indias economy. Over 58 per cent of the rural
first advanced estimates by the Central Statistical Organization (CSO), the share of
agriculture and allied sectors (including agriculture, livestock, forestry and fishery) is
expected to be 17 per cent of the Gross Value Added (GVA) during 2016-17 (at 2011-
12 prices). Hence, it is very much important to ensure proper credit flow (both
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However, certain problems/ risks have been observed by banks officials in extending
of loan money by farmers for purposes other than agricultural needs namely,
for social ceremonies like marriage, functions etc and sometime it is also used
for paying old debts. Apart from the above, sometimes farmers purchase
defective assets, due to which chances of loan default may increase. There is
(ii) Due to huge amount of agriculture loan work burden of bank officials also
increase. The main reason behind this is the number of accounts are more and
accounts are of small amount. So pre sanction visit, post sanction visit,
(iii) In agriculture loan there is sometimes lot of social, political and target
pressure on bank officials, who are indirectly forced to provide loans to the
Some of the possible suggestions for solving the above problems in agriculture loan
may be as follows:
large extent if tight monitoring is made by the bank officials on the use of
loans.
(ii) The overall work burden of bank officials on account of agriculture loan
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(iii) The problem of political, social and target pressure can be minimized if
the banks insist on the qualitative aspects of the agriculture loans (instead of
following measures:
(a) For bank officials, in spite of considering the total amount of loans
(4) Proper strengthening of the SHGs (Self Help Groups) and banks linkage
programme should be done by both the Central and State Governments, especially
with NABARD (National Bank for Agriculture & Rural Development), thereby
bearing promotional costs in the initial years. SHG Federations must be facilitated and
linked to various apex development agencies so that they become a vehicle of macro-
finance, human development and sustainable livelihoods for the rural poor in the
agriculture sector.
(5) Since the majority of the Indian populations are dependent on agriculture for their
need to place highest emphasis on agriculture sector in the forthcoming years. The
employment.
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Conclusions:
Agriculture is set to play a more dynamic role in the Indian economy, with the
government's increased focus on the sector. Therefore, all out efforts are required to
Agriculture sector and its stakeholders financially strong and more productive as well
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REFERENCES
House.
Dhingra, I. C. (1993). Rural Banking in India. New Delhi: Sultan Chand and
Sons.
Mumbai.
Government of India.
Government of India.
(APEDA).
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ANNEXURE
Response
Between 18 to 35 years
Between 35 to 45 years
Above 45 years
Response
Male
Female
Response
Yes
No
Q.4. For what purpose you have taken or are intending to take Agricultural loans?
Response
Cultivation of Crops
Animal Husbandry
Horticulture
Purchase of Agri Machinery
Others
Q.5. Whether you are availing or intend to avail agricultural loans for assets located in
Response
For Assets in Home State
For Assets in Other States
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Q.6. From which Bank/ Financial Institution you are availing/ intend to avail
Response
State Cooperatives
SBI
Public Sector Banks Other Than SBI
Private Sector Banks
Self Help Groups/ Others
Q.7. When you have last availed or are expected to avail the Agriculture Loan?
Response
Last year
Last 2 to 5 years
Current Year
In Near Future
Q.8. What is the approximate amount of Equated Monthly Installments (EMI) you are
Response
Up to 5000
Between 5001 and 10000
Above .10000
Q.9. How much processing fees/ charges you have given or are likely to give for your
agricultural loan?
Response
Up to 1% of Loan Amount
Between 1% to 2% of Loan Amount
More Than 2% of Loan Amount
Q. 10. Do you pay or likely to pay a flat rate of interest or interest on reducing
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Response
Flat Rate of Interest
Interest on Reducing Balance
Q.11. Whether banks/ financial institutions are insisting or likely to insist for any
Response
Yes
No
Q.12. Do you find the repayment programmes generally fixed by the banks/ financial
institutions in respect of Agricultural loans are comfortable with your Income level?
Response
Yes
No
Q.13. Are you satisfied with the lending or interest rates in respect of Agriculture
Response
Yes
No
Q.14. Have you attended any training/ education programmes on proper use of
agricultural financing being arranged by any banks/ financial institutions in your area?
Response
Yes
No
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