The government has asked public sector banks (PSBs) to increase the credit flow to small and marginal farmers by 10 per cent every year and remove regional imbalances in disbursal of agriculture credit in the country.
According to a finance ministry note to the CEOs of PSU banks, the committee of secretaries has recommended that coverage of small and marginal farmers needs to be increased by 10 per cent every year. “PSBs are requested to firm up effective strategy so as to ensure 10 per cent increase in coverage of small and marginal farmers every year. To achieve this goal, PSBs may take innovative measures such as financing of joint liability groups and producers organisations of small and marginal farmers,” the ministry note said.
As per the Agriculture Census (2010-11), out of the 138 million farming holdings in the country, 117 million (85 per cent) are small and marginal holdings covering about 43 per cent of net sown area. The credit extended by domestic scheduled commercial banks (SCBs) to small and marginal farmers was less than 6 per cent of ANBC (adjusted net bank credit) as of March 2015, with varied degree of achievement by different players within the industry, it said. “Hence there is an urgent need to increase coverage of small and marginal farmers under bank credit,” the note said.
The revised guidelines on Priority Sector Lending issued by the RBI focus on credit to small individual farmers as a new sub-target of 8 per cent for small and marginal farmers (to be achieved in a phased manner — 7 per cent by March 31, 2016 and 8 per cent by March 2017) has been introduced to help in increasing the flow of credit to small and marginal farmers.
On removing regional imbalance in disbursement of agriculture credit, the ministry note said, “Although agriculture credit targets have been surpassed by banks over the years, there are sharp regional imbalances in disbursement of agriculture credit. It has been observed that flow of credit is not adequate in north-eastern states, eastern and central regions and Jammu & Kashmir.” The Department of Financial Services has fixed the region-wise target of agriculture credit for 2016-17, which has been conveyed to the RBI, NABARD, PSBs and SLBCs.
The ministry note also said PSU banks should set internal targets for including new farmers or farmers not having Kisan Credit Card (KCC) under the KCC fold in view of the gap between the number of operational agricultural landholdings and the number of live/operative KCCs in the country. “Branches may be instructed to launch a special drive for the purpose. Further, the phase-wise target for conversion of operative KCCs into ATM-enabled/RuPay KCCs fixed by DFS must be achieved scrupulously,” it said.
As on March 31, 2016, the percentage of ATM-enabled KCCs as compared to operative KCCs works out at 67.44 per cent. It is the need of the hour to convert all KCCs into ATM-enabled/RuPay cards. DFS has been undertaking periodic review of conversion of KCCs into ATM enabled/ RuPay cards by PSU banks, fixing a phase-wise target for the purpose.
The ministry also took up the issue of people getting reliefs very late after natural calamities.
“It has been observed that on many occasion special state-level bankers meeting or district co-ordination committee meetings are held very late after declaration of natural calamities. The data regarding relief extended by banks is also not readily available with SLBCs,” it said, asking banks to ensure that necessary relief as per RBI’s guidelines is extended to farmers or borrowers in quickest possible time.
The target for agriculture credit for the year 2016-17 has been fixed at Rs 9,00,000 crore. The credit flow to agriculture in 2015-16 was Rs 8,77,224 crore as against the target of Rs 8,50,000 crore. Gross advances of PSU banks grew by 4 per cent from Rs 49.17 lakh crore as of March 2015 to Rs 51.16 lakh crore by March 2016.
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