ANALYSIS ON KISAN

CREDIT CARD SCHEME

(2003-2007)

Prepared by- Anuj Kumar Srivastava

Co-Helper- Mohit Gupta

(B.Sc. 2nd year)

Lucknow Christian College
 ACKNOWLEDGEMENT

I feel greatly privileged in presenting this project on Kisan Credit Card

scheme and would like to express my gratitude to my subject teachers
Mr. Ashutosh Kumar Srivastava and Mr. Raghvendra Singh for
their expert guidance and support for the successful completion of the
project.

I would like to give a special thanks to my co-helper Mohit Gupta for

his kind support in the completion of this project.

With Thanks
Anuj Kumar Srivastava
 Contents
 Introduction.
 Kisan Credit Card.
 Objectives.
 Salient Features.
 Advantages.
 Benefits to the Banks.
 Major steps by NABARD.
 Details of KCC.
 Data Collection.
 Choice of Tools.
 Tabulation.
 Calculation.
 Interpretation.
 Summary.
 References/Bibliography
 INTRODUCTION

India is an agriculture-based country. Agriculture continues to be the

mainstay of the Indian economy since it had got freedom, even much
before than that. About 43 % of India's geographical area is used for
agricultural activity. Agriculture provides the principle means of
livelihood for over 60% of India’s population. Despite a steady decline
in its share of the GDP, it remains the largest economic sector in the
country and plays a significant role in the overall socio-economic
development of India.
In spite of Agriculture being an important factor in economic
development, Indian agriculture is characterized by low productivity,
with average crop yields well below world levels. During the financial
year 2006-07, the agriculture and allied sector's growth slowed down to
2.7 per cent as against six per cent in the previous year.

The low productivity in India is a result of the following main factors:

 Illiteracy, general socio-economic backwardness, reforms and

inadequate or inefficient finance and marketing services for farm
produce.
 The average size of land holdings is very small (less than 20,000
m²) and are subject to fragmentation, due to land ceiling acts and in
some cases, family disputes. Such small holdings are often over-
manned, resulting in disguised unemployment and low
productivity of labour.
 Adoption of modern agricultural practices and use of technology is
inadequate, hampered by ignorance of such practices, high costs
and impracticality in the case of small land holdings.
With food being the crowning need of the mankind, much emphasis has
been on commercializing agricultural production. Hence, adequate
production and even distribution of food has lately become a high
priority global concern. With the changing agricultural scenario and
global competition, there is a need of exploiting the available resources
at maximum level. Hence Government agencies are promoting
diversification in production, research, and farm extension.

NABARD (National Bank for Agricultural and Rural Development) is

also one among those agencies in India, which has been established by
Government for supporting and promoting agriculture and rural
development with its mission statement as :

“Promoting sustainable and equitable agriculture and rural

prosperity through effective credit support, related services,
institution development and other innovative initiatives.”

In order to achieve its mission, NABARD is running on many plans and

schemes.

Some of the milestones in NABRARD activities are:

 Rural Infrastructure Development Fund (RIDF)

 Watershed Development Fund

 District Rural Industrial Project (DRIP)

 Kisan Credit Cards

In accordance with its mission, NABARD has been extending refinance

support in a big way to cooperative and Regional Rural Banks for
financing seasonal agricultural operations of the farming community in
our country.

NABARD has been playing a proactive and catalytic role in guiding the
banks to meet the emerging challenges for serving their customers in the
best possible manner. Towards this end, several innovative strategies
have been evolved by NABARD. The instrument of Kisan Credit Card
(KCC) is one of the key products developed to improve the farmer’s
accessibility to bank credit, simplify credit delivery mechanism and
provide more flexibility in use of credit.

The main objective of this report (based on working of NABARD and

its Associate Banks) is to analyze the data related to the annual release
of Kisan Credit Card and the annual loan amount sanctioned for it in
selected region so as to apply some appropriate statistical tools in it and
make a study over one of its aspect.
 KISAN CREDIT CARD
Agricultural credit cards are not a new concept in the field of
agricultural banking in India. The scheme had already been introduced
in a number of public sector banks in a few states much earlier. These
schemes were niche-marketed and were exclusively preserved for the
privileged class of farmers and the small and marginal farmers did not
have much access to them. Similarly cash credit facilities were being
extended by several public sector banks and Cooperative banks to
farmers with the view to improving their access to credit. Again this
scheme was used only selectively.

The KCC scheme was started by the Government of India (GOI) in

consultation with the RBI (Reserve Bank of India) and NABARD
(National Bank for Agricultural and Rural Development) 1998-99 to join
the features of both these schemes and to overcome their shortcomings.
Kisan Credit Card Scheme aims at provision of adequate and timely
support from the banking system to the farmers for their cultivation
needs including purchase of inputs in a flexible and cost effective
manner. With the help of this scheme farmers may readily purchase
agricultural inputs such as seeds, fertilizers, pesticides etc. and also draw
cash for their production needs.
 OBJECTIVES OF KCC

 To provide insurance coverage and financial support to the farmers

in the event of failure of crops as a result of natural calamities,
pests and diseases

 To encourage farmers to adopt progressive farming practices, high

value inputs and higher technology in agriculture.
 To help stabilize farm incomes, particularly in disaster years.
 To support and stimulate primarily production of food crops and
oilseeds.
 Farmers to be covered: All farmers (both loanee and non-loanee
irrespective of their size of holdings) including sharecroppers,
tenant farmers growing insurable crops covered.
 Sum insured: The sum insured extends up to the value of threshold
yield of the crop, with an option to cover up to 150% of average
yield of the crop on payment of extra premium.
 Premium subsidy: 50% subsidy in premium allowed to Small and
Marginal Farmers, to be shared equally by the Government of
India and State Government/Union Territory. Premium subsidy to
be phased out over a period of 5 years.
 SALIENT FEATURES OF KCC

The features of the scheme are as follows:

 Type of revolving cash credit facility with unlimited withdrawals

and repayments.
 Meet the production credit need, cultivation expenses, and
contingency expenses of the farmers.
 Limits based on the basis of operational land holding, cropping
pattern and scale of finance. This limit is inclusive of 20% of
production credit.
 Each withdrawal to be paid within 12 months.
 Card valid for 3 years subject to annual renewals.
 Sub-limits may be fixed at the discretion of banks.
 Credit limits can be enhanced depending on performance and
needs.
 Rescheduling is also possible depending upon the situation. If for
example the crops fail due to a natural calamity and the farmer is
not able to repay his loan, then he could get an extension of up to
four years.
 Cash withdrawals through slips accompanied by card and
passbook.
 A credit cum passbook would be issued.
 All branches engaged in agricultural lending could issue Kisan
Credit Cards.
 Security, margin, rate of interest, etc. as per RBI norms.
 ADVANTAGES OF KCC

 Advantages to farmers.
 Access to adequate and timely credit to farmers.
 Full year's credit requirement of the borrower taken care of.
 Minimum paper work and simplification of documentation
for withdrawal of funds from the bank.
 Flexibility to draw cash and buy inputs.
 Assured availability of credit at any time enabling reduced
interest burden for the farmer.
 Sanction of the facility for 3 years subject to annual review
and satisfactory operations and provision for enhancement.
 Flexibility of withdrawals from a branch other than the
issuing branch at the discretion of the bank.
BENEFITS OF THE SCHEME TO THE
BANKS

 Reduction in work load for branch staff by avoidance of repeat

appraisal and processing of loan papers under Kisan Credit Card
Scheme.
 Minimum paper work and simplification of documentation for
withdrawal of funds from the bank.
 Improvement in recycling of funds and better recovery of loans.
 Reduction in transaction cost to the banks.
 Better Banker - Client relationships.
MAJOR STEPS TAKEN BY NABARD FOR
KCC

 A Brochure on KCC Scheme highlighting the salient features,

advantages and other relevant information about the Scheme
was brought out by Head Office and ROs were asked to
circulate the brochure to State govt. departments, Commercial
Banks, Cooperative Banks, RRBs and other concerned
agencies/officers so as to generate wider awareness about the
Scheme.
 Floor limit of Rs.5000/- for issue of KC Cards stands
withdrawn.
 Studies on KCC Scheme have been entrusted to BIRD and
NABARD Staff College to facilitate feed back on the ground
level issues/problems so that changes, where necessary, could
be considered.
 Studies on the implementation of the Scheme undertaken by
NABARD periodically.
 On the lines of instructions of RBI to Commercial Banks,
Cooperative Banks and RRBs have been advised that they may,
at their discretion, pay interest at a rate based on their perception
and other relevant factors on the minimum credit balances in the
cash credit accounts under the Kisan Credit Cards of farmers
during the period from 10th to the last day of each calendar
month.
 Regional Rural Banks (RRBs) were advised to initiate
innovative publicity campaign in each area of operation in order
to cater all eligible farmers under KCC.
 DETAILS OF KCC

ELIGIBILITY

Borrowers with good track record over the past 2 years would be the
prime customers. New borrowers could also be included if they could
get proof of operational land holding from the Patwari.

SELECTION METHODOLOGY
The farmer would be evaluated by the bank, on financial grounds by
looking at his past record with the bank, and on personal grounds by
looking at his reputation in the village.

FIXATION OF CREDIT LIMIT

The credit limit under the card may be fixed on the basis of the
operational land holding, cropping pattern and the scale of finance by
the District Level Technical Committee (DLTC) and SLTC. If the limit
has not been fixed by the DLTC/SLTC or the limit in the opinion of the
bank is low, appropriate scale of finance for the crop may be fixed by
the bank.

VALIDITY AND REPAYMENT SCHEDULE

A card once issued would be valid for a period of 3 years. The facility
may be extended, the amount enhanced or cancelled, depending on the
performance of the farmer. Repayments are to be made within 12
months of taking the credit.
MARGIN

In Co-operative Banks and RRB’s, margin of the loan amount is decided

according to the area of land holding of the farmer.

COLLATERAL

As per the loan policy of Co-operative Banks and RRB’s, there is no

such requirement of any security to be deposited in the Banks against the
credit availed by the farmer, but the Bank enquire about the original
documents of the land holding(s) of the farmer.

INTEREST

Amount of Interest for repayment period:

For RRB’s:

Up to Rs.300000 ------------------------------------------9%

Above Rs.300000-----------------------------------------12%

(Agricultural Credits are also provisioned for an additional subsidy of 2% by RBI)

For Co-operative Banks:

Rate of interest---------------------------------------------6%

For late repayment----------------------------------------7%

 FORMAL OF KISAN CREDIT CARD CUM

PASSBOOK

KISAN CREDIT CARD

Issuing Bank
Valid up to
Valid for operation at ________ Branch/ (es)/PACS __________
Name of the Card Holder
Father’s /Husband’s Name
Name of the Nominee for Insurance
Name of PACS:
(In case of coops)
Address
Name of Village
Block
P.O

Signature/ Left Hand Thumb Signature of Issuing

Impression of the Card Holder Authority with seal
Serial No. :
Operational: Irrigated Unirrigated
Land holding (in hectares):
Owned:
Leased in:
Total:
Less: Leased out:
Net Total:
C.C. A/c No. :
Ledger Folio:
Limits sanctioned:
Sub limits if any:
Operative Period:
Signature of issuing Signature of Secretary of PACS
Authority with seal (In case of Cooperatives)
 PASSBOOK PARTICULAR OF TRANSACTIONS
DATE PARTICULAR DEBT CREDIT BALANCE SIGNATURE

( RS ) (RS) (RS) OF
BANK/PACS
OFFICIAL
 DATA COLLECTION

Kisan Credit Cards are making waves across India now. Now days many
farmers are taking interest in this scheme so that they can easily
purchase the agricultural inputs and also draw cash for their production
needs. With this thought, we collected data related to Kisan Credit Card
scheme in selected regions to make a study over some of its aspects. The
data has been collected from the following six branches of RRB’s in
Uttar Pradesh :

 SARVA U.P GRAMIN BANK

Gaura Chauraha, Balrampur
 SARVA U.P GRAMIN BANK
Nai Bazar,Tulsipur,Balrampur
 SARVA U.P GRAMIN BANK
Lalnagar sipahiya,Tulsipur,Balrampur
 SARVA U.P GRAMIN BANK
Balrampur
 SARVA U.P GRAMIN BANK
Devipatan,Tulsipur,Balrampur
 SARVA U.P GRAMIN BANK
Gaisary,Tulsipur,Balrampur
The figures of the data are as follows:

SARVA U.P GRAMIN BANK ( Gaura Chauraha, Balrampur)

Amount sanctioned
No. of cards (Rs.)in lac
2003-2004 59 10.30
2004-2005 130 30.77
2005-2006 124 27.65
2006-2007 107 35.23

SARVA U.P GRAMIN BANK ( Nai Bazar,Tulsipur,Balrampur)

Amount sanctioned
No.of cards (Rs.)in lac

2003-2004 133 44.42

2004-2005 190 56.26
2005-2006 279 10.75
2006-2007 389 14.73
SARVA U.P GRAMIN BANK (Lalnagar sipahiya,Tulsipur,Balrampur)
 Amount sanctioned
No.of cards (Rs.)in lac
`
2003-2004 50 15.06
2004-2005 85 21.25
2005-2006 91 33.68
2006-2007 111 47.29

SARVA U.P GRAMIN BANK( Balrampur)

Amount sanctioned
No.of cards (Rs.)in lac
`
2003-2004 11 04.25
2004-2005 29 28.00
2005-2006 27 17.35
2006-2007 23 14.87
SARVA U.P GRAMIN BANK (Devipatan,Tulsipur,Balrampur)
 Amount sanctioned
No.of cards (Rs.)in lac
`
2003-2004 60 10.10
2004-2005 143 37.80
2005-2006 93 34.18
2006-2007 77 33.22

SARVA U.P GRAMIN BANK(Gaisary,Tulsipur,Balrampur)

Amount sanctioned
No.of cards (Rs.)in lac
`
2003-2004 21 05.78
2004-2005 188 47.83
2005-2006 150 49.85
2006-2007 182 84.17

CHOICE OF TOOLS
From the given data, we have to check the significant difference
between the no. of cards issued with respect to:
(1) each fiscal year from 2003-2007 and
(2) the different branches
Here we apply F-test ,taking null hypothesis as:
Ht: No. of cards issued by different branches are equal.
Ht: T1 = T2=T3=T4=T5=T6
Hb: No. of cards issued in each fiscal year are equal.
Hb: B1=B2=B3=B4
Correction Factor (C.F) = G2/N
N=NO.OF BRANCHES x NO.OF SESSIONS
G= ∑ Ti or G= ∑ Bj

Raw S.S = ∑∑ yij2

S.S.T = (1/4)∑ Ti2 – C.F

S.S.B = (1/6) ∑Bj2 – C.F
Error S.S = T.S.S – S.S.T- S.S.B
Degree of freedom for Treatment = t -1
Degree of freedom for Blocks = r-1
Variance Ratio (F):Ft=M.S.T/M.S.E and Fb=M.S.B/M.S.E
tabulation

BALRAM
 LAL PUR DEVI
Bj GAISARY
TOTAL Bj2
GAURA NAI NAGAR PATAN
CHAURAHA BAZAR =∑ Bj
SIPAHIYA
Ti

2003-2004 59 133 50 11 60 21 334

111556
2004-2005 130 190 85 29 143 188 765 585225
2005-2006 124 279 91 27 93 150 764 583696
2006-2007 107 389 111 23 77 182 889 790321

TOTAL

= ∑ Ti 420 991 337 90 373 2752=G

541

292681
Ti2 176400 982081 113569 8100 139129

105 247.75 84.25 22.5 93.25 135.25

AVERAGE
(TABLE NO. -1.1)

Bj NUMBER OF KCC RELEASED IN DIFFERENT BRANCHES OF RRB’S.

Ti SESSIONS.

CALCULATIONS
CORRECTION FACTOR = G2/N

= (7573504) /24

=315562.32
(N=NO.OF BRANCHES x NO.OF SESSIONS)

R.S.S = ∑∑ yij2 = 483735

T.S.S = R.S.S. - C.F = 483735 - 315562.32 =168172.68
S.S.T = (1/4)∑ Ti2 – C.F (for ∑ , i=1 to 6)

=427990 – 315562.32
=112427.68

S.S.B = (1/6) ∑Bj2 – C.F (for ∑ ,j=1 to 4)

= 345133 – 315562.32
= 29570.68

ERROR S.S = T.S.S – S.S.T- S.S.B

= 168172.68 – 112427.34 – 29570.34
= 26175

ANOVA TABLE
SOURCES OF

VARIATIONS d.f. S.S. M.S.S. VARIANCE RATIO

(F)

TREATMENT 5 112427.34 22485.46 Ft =22485.46/1745

=12.8856

BLOCK 3 29570.34 9856.78 Fb =9856.78/1745

=5.6485

ERROR 15 26175 1745

TOTAL 23 168172.68

(TABLE NO.-1.2)

INTERPRETATION
From calculations:

In case of null hypothesis Ht:

Fcal= 12.88 and tabulated F0.05,(5,15)=4.5
i,e; Fcal > Ftab
Hence, reject Ht
i.e; there is a significant difference in the number of cards released in
different branches (under study) ,at 5% level of significance.

In case of null hypothesis Hb:

Fcal=5.64 and tabulated F0.05,(3,15)=5.42
i,e; Fcal> Ftab
Hence, reject Hb
i,e; there is a significant difference in the number of cards released in
different fiscal years from 2003-2007, at 5% level of significance.

SUMMARY
This report gives a full fletched analysis on the data related to the KCC
in some branches of RRB’s. It also includes the salient features, benefits
to the banks, advantages of KCC to farmers, details of KCC, and some
details about the organization which introduced the policy of KCC to the
farmers. It also provides the formal of Kisan Credit Card cum passbook.
In the beginning it also provides a glimpse of Kisan Credit Card’s
history.

This data provides with the case study of some data related to KCC in
six branches of Sarva U.P Gramin Bank and shows that there is a
significant increase in the number of cards issued in each fiscal year by
the six different branches.

Moreover, with the help of the report and the data attached to it, it’s
observed that the general awareness among the farmers has increased in
past few years and they are capable of purchasing agricultural inputs so
easily that their land’s productivity has increase to a greater extent.

REFERENCES
The employees of the following Banks provided us with the data of
Kisan Credit Card schemes:

 SARVA U.P GRAMIN BANK

Gaura Chauraha, Balrampur
 SARVA U.P GRAMIN BANK
Nai Bazar,Tulsipur,Balrampur
 SARVA U.P GRAMIN BANK
Lalnagar sipahiya,Tulsipur,Balrampur
 SARVA U.P GRAMIN BANK
Balrampur
 SARVA U.P GRAMIN BANK
Devipatan,Tulsipur,Balrampur
 SARVA U.P GRAMIN BANK
Gaisary,Tulsipur,Balrampur
 NABARD, Lucknow

BIBLIOGRAPHY
 Fundamentals Of Applied Statistics
(S.C .Gupta & V.K.Kapoor)
 Fundamental Of Statistics
(A.M.Gun, M.K.Gupta & B.Dasgupta)
 India Today
 Outlook
 Some websites link:
www.nabard.org
www.indianet.com
www.google.com