Kisan Credit Card: IBA advisory waives off processing and other charges for KCC; Government to launch campaign for financial inclusion
The Department of Agriculture, Cooperation and Farmers Welfare announced the launch of campaign with immediate effect to saturate farmers for financial inclusion under Kisan Credit Cards (KCC). This campaign will be launched through the Financial Institutions including Commercial Banks, Cooperative Banks and Regional Rural Banks in collaboration with the State Governments.
The Indian Banking Association (IBA) on February 4, 2019 issued advisory guidelines requesting banks to waive off the processing, documentation, inspection, ledger folio charges and all other service charges for crop loans up to Rs 3 Lakhs or for the Kisan Credit Card Scheme.
The move aims to provide direct benefit to farmers and ease the pressure on them.
What led IBA to issue advisory guidelines?
It came to the notice recently that some of the scheduled commercial banks are collecting a nominal amount of service charges towards processing, documentation, and inspection for agriculture loans.
On the other hand, some banks are collecting bit higher service charges, irrespective of whether the loan is sanctioned or not. This often acts as a deterrent for the farmers to approach the banks for loans. Considering this, the IBA issued the advisory guidelines.
Plight of Small and Marginal Farmers in India
In India, land holding pattern is dominated by Small and Marginal Farmers (SMF) category. Around 85 percent of the total operational holding in India is in the SMF category, which is about 43 percent of the gross cropped area.
There are around 21.6 crore small and marginal farmers in the country. Taking this into account, it becomes crucial to provide timely and affordable credit to this resource constrained group for attaining inclusive growth.
Moreover, the small and Marginal farmers are the most affected ones during floods, droughts and other natural calamities. As per Parliamentary Standing Committee on Agriculture, the losses due to climate change account for overall GDP loss of 1.5 percent of agriculture economy.
In addition to that, the instability in income of the farmers due to various types of risks involved in production and low bargaining power add more distress to the already affected farmers.
Government to launch campaign with immediate effect to saturate farmers with Kisan Credit Cards
The Department of Agriculture, Cooperation and Farmers Welfare on February 4, 2019 itself announced the launch of campaign with immediate effect to saturate farmers for financial inclusion under Kisan Credit Cards (KCC).
This campaign will be launched through the Financial Institutions including Commercial Banks, Cooperative Banks and Regional Rural Banks in collaboration with the State Governments. The Department of Financial Services has already issued directives to these financial institutions under their purview. There are around 6.95 crore active KCCs.
The success of the campaign will depend on collaboration and leadership of the State Government and the District Administration. To make this campaign successful, following strategy will be adopted:-
• The KCC will be issued in a time bound manner from the branch where the farmer is already having an account.
• In case the eligible farmer is not having any bank account, the same will be immediately opened in any of the nearby branch.
• The camps for collection of applications can be organised bank wise or village wise. The District Level Bankers Committee will decide the modalities of the camp and the date wise schedule.
• For village wise camps, the field level development and revenue functionaries would be present on the pre designated dates in the concerned village.
• If the camps are organised branch wise, the field level functionaries would bring eligible farmers to the concerned bank branches on the designated dates.
• Farmers can avail the option of directly submitting the complete application form with necessary documents to the bank branch for issue of KCC.
• IBA has also issued an advisory guideline to all the banks to waive the processing, documentation, inspection, ledger folio charges and all other service charges for KCC and crop loans up to Rs. 3 lakhs keeping in view the hardship and financial distress of small and marginal farmers.
• Eligible farmers will be issued KCCs by the concerned banks within two weeks of the submission of completed application forms.
In the Interim Budget 2019, the Government announced that under the Kisan Credit Card scheme (KCC), 2 percent interest subversion will be given for farmers pursuing Animal Husbandry and Fisheries and additional 3 percent interest subversion will be given for those who repay the loan in time. Department of Animal Husbandry, Dairying & Fisheries will shortly issue a detailed circular in this regard.
Kisan Credit Card Scheme
The Kisan Credit Card (KCC) scheme was announced in the Budget speech of 1998-99, when Yashwant Sinha was the Union Finance Minister, to fulfil the financial requirements of the farmers at various stages of farming through institutional credit.
The model scheme was prepared by the National Bank for Agriculture and Rural Development (NABARD) on the recommendation of R.V Gupta committee.