Listing out the measures taken by the Government and RBI to facilitate the ease of credit flow from RRBs to agriculture sector and SMFs including SC/ST farmers, the Minister stated:
The Master Directions on Priority Sector Lending (PSL) issued by RBI prescribe an enhanced target of 75% for RRBs for lending to the priority sector, as against the target of 40% applicable to Commercial Banks.
Target for SMF is to be raised from 8% to 10% between 2020-21 and 2023-24 in a phased manner.
Government of India implements an interest subvention scheme under which short term crop loans up to Rs.3.00 lakh are provided to farmers at a reduced interest rate of 7% p.a. The scheme provides interest subvention of 2% per annum to Banks on use of their own resources. Besides, additional 3% incentive is given to the farmers for prompt repayment of the loan, thereby reducing the effective rate of interest to 4%.
The Kisan Credit Card (KCC) scheme was introduced in 1998 for issue of KCC to farmers. The scheme aims at providing adequate and timely credit support from the banking system under a single window with flexible and simplified procedure to the farmers to meet their short term credit requirements for cultivation of crops, investment credit requirement for agriculture and allied activities and other needs.
To enhance coverage of small and marginal farmers in the formal credit system, RBI has decided to raise the limit for collateral-free agriculture loans from Rs.1 lakh to Rs.1.6 lakh.
A new scheme for KCC to Animal husbandry and Fisheries farmers has also been introduced through Banks, including RRBs, to meet their working capital requirement. The benefits of KCC along with interest subvention have been extended to Animal Husbandry and Fisheries farmers.
The requirement of 'no dues' certificate has also been dispensed with in respect of small loans up to Rs.50,000 availed by small and marginal farmers, share-croppers and the like and, instead, only a self-declaration from the borrower is required.
Small, marginal, tenant farmers, oral lessees, etc. are to be brought into the fold of institutional credit, Joint Liability Groups (JLGs) promoted by banks.
NABARD extends refinance at concessional rate of interest to RRBs for supplementing their resources for short-term and long-term lending. Refinance is expected to increase ground level credit and boost capital formation in agriculture.
During 2020-21, NABARD disbursed total refinance of Rs.44,975 crore to RRBs, which included Long Term refinance of Rs.15,157 crore and Short-Term refinance of Rs.29,818 crore.