किसान क्रेडिट कार्ड: एक किसान अनुकूल वित्तीय उपकरण

Agriculture is the backbone of Indian economy. Majority of farming communities earn their livelihood from agriculture and allied activities. They have small and marginal land holding resulting less saving and follow traditional practices. Generally, they used to invest money, borrowed from money lenders for meeting the cost of agricultural activities.

The terms of lending by these money lenders were unfavourable and inimical to the interest of the farmers. Before independence, several steps were taken up in our country by the government agencies to help the farming communities. In independent India, major break through took place in 1969 after nationalisation of commercial banks  to make the benefits of institutional finance to reach a wider range of economic activities.

The state Co-operative Land Development Banks were set up for refinancing of agricultural activities. In 1976, Regional Rural banks were set up to further strengthen it.

Kisan Credit Card (KCC) scheme was introduced in August 1998. Today KCC has emerged as an innovative credit delivery mechanism to meet the production credit requirements of the farmers. As per, Barik (2010) National Bank for Agriculture and Rural Development (NABARD)introduced KCC scheme to enhance flow of credit to the rural sector and reduce the dependence of farmers on non-institutional sources of credit.

Uppal and Juneja (2012) found that commercial banks are most successful in fulfilling the objectives of NABARD followed by regional rural banks (RRBs). The scheme is under implementation in the entire country involving commercial banks, RRBs and Co-operatives. It has received wide acceptability amongst bankers and farmers.

The implementing banks have the discretion to adopt the scheme to suit institution/location specific requirements. The State governments have been advised to launch an intensive branch/village level campaign to provide KCC to all the eligible and willing farmers in a time bound manner.

It is a flexible and simplified procedure, adopting whole farm approach, including short-term (cultivation of crops, post harvest expenses, produce marketing loan, consumption requirements of farmer household), medium-term (working capital for maintenance of farm assets and activities allied to agriculture like dairy animals, inland fishery) and long-term (purchase of tractor, land development/improvement) credit needs of borrowers for agriculture and allied activities and a reasonable component for consumption need.

Under the scheme, beneficiaries are issued with a credit card and a pass book or a credit card cum pass book incorporating the name, address, particulars of land holding, borrowing limit, validity period, a passport size photograph of holder etc. It serves both as anidentity card and facilitate recording of transactions on an ongoing basis.

Presently RuPay Card are also issued to all  KCC holders which has enabled them to withdraw money from any ATM or Bank Mitra Locations situated in the country.This RuPay Card may also be used at Point of Sale (POS) machine to purchase commodities as per requirement of the farmer.

It is advantageous to a KCC holder due to simplified procedure for credit, no need to apply for loan every year, allowing him to buy seeds, fertilizers and other inputs as per his/her needs, repayment is allowed after harvest period, flexibility of drawl of funds from any branch etc.

Similarly, KCC helps the banking system in several ways like, work load of rural branches is considerably reduced, simplification of documentation and disbursement procedure, improvement in recycling of funds and better recovery of loans, reduction in transaction cost to the banks, better banker - client relationships. The scheme has following features-

Eligibility for KCC:

Following persons are eligible to avail the benefit of KCC:

1. Farmers - Individuals/Joint borrowers (owner cultivators),
2. Tenant farmers, oral lessees & share croppers and
3. Self help groups or joint liability groups (JLGs) of farmers including tenant farmers, share croppers etc.

Fixation of credit limit/Loan amount:

For the convenience it can be grouped in two parts namely, farmers other than marginal farmers and marginal farmers -

(A) Farmers other than marginal farmers:

Short term limit for 1^st year   (in case of single crop in a year) : Scale of finance for the crop (as decided by district level technical committee) x extent of area cultivated + 10%  of  limit  towards  post-harvest/ household /consumption requirements +20% of limit towards repairs and  maintenance  expenses  of  farm  assets + crop insurance, Personal Accident Insurance Scheme (PAIS) and asset insurance. For example scale of finance operational for different agricultural crops (Table 1) in the district of North 24 Parganas of West Bengal (2014-15) as follows:

Table 1: Scale of finance for agricultural crops in North 24 Parganas district of West Bengal (2014-15)

Limit for second and subsequent year: 

First year limit as above plus 10% of the limit towards cost escalation/ increase in scale of finance for every successive year (2nd, 3rd, 4th and 5th year) and estimated term loan component for the tenure of KCC, i.e., 5 years. There is no need of fresh documentation during the validity of the limit.

More than one crop in a year:

The limit is fixed as above depending upon the crops cultivated as per proposed cropping pattern for the first year and an additional 10% of the limit towards cost escalation / increase in scale of finance for every successive year (2nd, 3rd, 4th and 5th year). It is assumed that the farmer adopts the same cropping pattern for the remaining 4 years also. The limits are reworked in the subsequent year, when there is a change in cropping pattern by the participating farmer,

Term loans 

Term loan is an investment towards land development, minor irrigation, purchase of farm      equipment and allied agricultural activities. The banks fix the quantum of credit for term loan and working capital limit for agricultural and allied activities, etc., based on the unit cost of the asset/s proposed by the farmer. For allied activities already being undertaken  on the  farm,  the  bank’s judgment on repayment capacity vis-a-vis total loan burden devolving on the farmer, including existing loan obligations determine the limit. The  long  term  loan (maximum limit is Rs. 10 lakh or 50% of the value of land)  limit  is  based  on  the  proposed investments during the  5 year period and the bank’s perception on the repaying capacity of the farmer.

Maximum Total Amount: The short term loan limit arrived for the 5th year plus the estimated long term loan requirement is the Maximum Permissible Limit (MPL) and treated as the KCC Limit.

Fixation of Sub-limits: 

The card limit is bifurcated into separate sublimits for short term cash credit limit cum savings accountand term loans because interest rates are different.

Drawing limit for short term cash credit is fixedbased on the cropping pattern and the amounts for crop production, repairs and maintenance of farm assets and consumption (allowed) as per the convenience of the farmer. In case the revision of scale of finance for any year by the district level committee exceeds the notional hike of 10%, contemplated while fixing the 5 year limit, a revised drawable limit is fixed.

Accordingly, the farmers are advised about the same. In casesuch revisions are required the card limit itself is enhanced (4th or 5th year), the same is done and the farmers are advised. For term loans, installments are allowed to be withdrawn based on the nature of investment and repayment schedule drawn as per the economic life of the proposed investments. At any point of time the total liability is within the drawing limit of the concerned year.

(B) Marginal farmers:                                 

A flexible limit of Rs.10, 000 - 50, 000 is provided (as Flexi KCC) based on the land holding and crops grown including post harvest, warehouse storage related credit needs and other farm expenses, consumption needs, etc., plus small term loan investments like purchase of farm equipment, establishing mini dairy/backyard poultry as per assessment of Branch Manager without relating it to the value of land. The composite KCC limit is fixed for a period of 5 years on this basis.  

Disbursement:

The short term component of the KCC limit is in the nature of revolving cash credit facility.There is no restriction in number of debits and credits. 

Delivery channels: 

The amount can be drawn (a) from branch (b) through cheque facility (c) through ATM/ Debit cards (d) through business correspondents/ bank mitras and ultra small branches (e) through Point of sale available in Sugar Mills/ Contract farming companies, etc., especially for tie-up advances (f) through Point of Sale available with input dealers or (g) as mobile based transfer transactions at agricultural input dealers and mandies.  

Validity / Renewal features:

  The salient features are:

1. Banks determine the validity period of KCC and its periodic review.
2. Banks grant extension and/or re-schedulement of the period of repayment on account of natural calamities affecting the farmer. The period for reckoning the status of operations as satisfactory or otherwise, get extended together with the extended amount of limit. If, proposed extension is beyond one crop season, the aggregate of debits for which extension is granted, is transferred to a separate term loan account with stipulation for repayment in installments. 

Repayment Period: 

The repayment period is fixed by banks as per the anticipated harvesting and marketing period for the crops for which a loan has been granted (depicted in Table 1). 

Margin:

No margin money is required for KCC and term loan against land upto limit of Rs1.00 lakh. A loan amount exceeding Rs. 1 lakh requires 15% margin.

Security:

a) Only hypothecation of crops up to card limits of Rs. 1.00 lakh and does not require any security to be deposited as guarantee to the bank. The crop stand only fulfills the criteria of security.

b) Collateral security may be obtained at the discretion of Bank forloan limits above Rs.1.00 lakh. Form 1 is signed by lonee and is send by the bank to Land Registry office informing that loan is outstanding against the land.

Interest rate in KCC:

Annual interest @ 7% p.a. (Normal rate minus interest subvention) is charged to avail the short term credit requirements for cultivation of crops and Post-harvest expenses provided  repayment is made within the  time frame. The famer is also eligible for rebate of another 3% p.a. on prompt repayment from the State Government of West Bengal.

The borrower is also eligible to earn interest @4% p.a. on the credit balance of the KCC a/c calculated on the basis daily product.Further Interest subvention will not be available for the following categories of loan where interest rate will be the normal rate fixed by the individual bank for agriculture advances:

• Produce Marketing loan.
• Consumption requirement of farmer household.
• Working capital for maintenance of farm assets and activities allied to agriculture, like dairy    animals, inland fishery, etc.
• Investment credit requirement for agriculture and allied activities like pump sets, sprayers, dairy animal, etc.

Other Conditions: 

All the KCC loans are compulsorily covered under Pradhan Mantri Fasal BimaYoyna (PMFBY) where premium are shared by the Central Government/State Government and the borrowers on the basis of agreement between Government and the insurance companies. Besides the mandatory crop insurance, the KCC holder has the option to take benefit of Assets Insurance, Personal Accident Insurance Scheme (PAIS) and Health Insurance (wherever product is available). 

They can pay the premium through their KCC account. Compulsory premiums are paid on the basis of agreed ratio between bank and borrowers to the insurance companies from KCC accounts.

Annual growth rate of KCC in India from 1998-99 to 2012-13 showed that there was 22.20 % and 33.08 % increase in number of credit cards issued and amount sanctioned as credit. A strong relationship between credit given through KCCs scheme and agricultural and allied activities Gross Domestic Product, total agricultural credit by scheduled commercial banks and Total Gross Domestic

Product has been observed (Saleem and Reddy, 2014).So far Commercial banks, Co-operatives and RRBs had issued 8.24 lakh, 2.69 lakh and 2.04 lakh cards respectively. In certain states such as Andhra Pradesh, Maharashtra, Rajasthan, Orissa, Karnataka, Gujarat and Uttar Pradesh more than 5 lakh Kisan Credit Cards were issued.

A study of financial institutions (Commercial banks, Co-operatives and RRBs) of the country showed that there was a wide disparity in the progress and performance of this scheme. Out of five geographical zones viz., Western Zone, South Zone, North Zone, North-Eastern Zone and Eastern Zone, the North Eastern regions continued to be underperformers with respect to KCC scheme.

The performance of states like Gujarat, Haryana, Orissa, Maharashtra, Rajasthan and Punjab may be regarded as moderate. In the remaining states, banks have to cover a lot of farmers under the scheme (Marichamy and Aananthi 2014).  As the end March 2013, there were 1, 29, 82,000 farmers accessing bank credit under the scheme.

Thus, KCC scheme has emerged as an innovative credit delivery mechanism to meet the production credit requirements of the farmers involving commercial banks, RRBs and Co-operatives. However, during the last 15 years of implementation, many impediments were encountered by policy makers, implementing banks and the farmers. At the operational level, certain challenges like strict eligibility criteria adopted by the banks, its issue, remittance of crop insurance premium, etc. discouraged the farmers to opt it. 

Arrangements for verified database of farmers will help banks in providing loan to the real needy ones. Some serious efforts from banks are required to focus on vulnerable groups of poor performing zones in terms of coverage of holdings such as north zone, north eastern zone and eastern zone.

A Working Group under the Chairmanship of Shri T. M. Bhasin, CMD of Indian Bank reviewed the Kisan Credit Card. As per suggestions, various steps (plastic card, wider option of delivery channels and emphasis on joint liability groups) have been initiated to make the KCC scheme into a Smart Card cum Debit Card. Thus, revised KCC scheme has been operational from April 2012.

A good progress in the KCC scheme has been observed strengthening agricultural sector of our country. Further incorporation of corrective measures will usher agricultural and allied sector into new era of sustainable socio-economic development. 

Refrences:

Barik, B. B. (2010). Kisan Credit Card Scheme – A Dynamic Intervention for Reduction in Rural Poverty, International Journal of Marketing and Technology.1(2).

Marichamy K. and AananthiN. (2014).Kisan Credit Card – A Boon to SmallFarmers in India, Tactful Management Research Journal , 2 (8): 1-6. 

Authors

Chandan Kumar Das^*, Shailesh Kumar^**and M.L.Roy^***

*  Deputy Lead District Manager, Zonal Office, Allahabad Bank, North 24 Parganas – 700124 , West Bengal

**  Sr.Scientist, ICAR-CRIJAF,Barrackpore, Kolkata – 700120, West Bengal

*** Scientist, ICAR-CRIJAF,Barrackpore, Kolkata – 700120, West Bengal

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