WAYS OF BOOSTING AGRICULTURAL CREDIT IN BANKS

Sources of agriculture credit can be broadly classified into institutional and non -institutional sources. Non-institutional sources include moneylenders, traders and commission agents, relatives and landlords but institutional sources include co-operatives, commercial banks including the SBI Group RBI AND NABARD.

- Rajeev Kumar

The 1st step to boost credit flow to agriculture sector is targeting. This targeting practices is followed for raising the flow of agriculture credit. As the budget allocation increased to 1.42 lakh crore in financial year 2019-20 accordingly flow of credit should increase and to be followed.

2nd step is crop loan : Arrangement has been made to provide crop loan to farmers. Along with crop loan proper communication to farmers about timely repayment and net interest charge that is 4 % should be more emphatic.

3rd step is Discouraging distress sale: In order to discourage distress sale of crops by farmers the benefit of interest subvention has been made available to small and marginally farmers having Kisan cards for a further period of 6 months against negotiable warehouse receipts at the commercial rates. Also other farmers are also covered under warehouse receipt loan up to 50 lakh. This is one of the good scope of financing.

4th step is Relief for natural calamities: In order to provide relief to farmers on occurrence of natural calamities interest subvention of 2% will continue to available to banks for the first year on restructured loan.

In case of severe calamities fresh loan can be sanctioned as per RBI guide lines that is another grey area for financing.

5th step is to finance actors along the value chain: The focus is on the links between different actors along a value chain. Agriculture entails a sequence of interlinked activities - transaction- in a chain that starts from the supply of seeds and fertilizers and finish in the mouth of consumers. These are financial instruments specially designed to strengthen these links between the actors along the value chain.