Cost of credit

Information accessed by Down To Earth under the Right To Information Act belies the government's claim that banks give farm loans without any service charge or mortgaging farmer's land

- VIVEK MISHRA

ALL KINDS of service charges like processing fee, inspection, ledger folio charges for loans up to ₹3.00 lakh has [sic] been waived off. Collateral free loan limit for short-term agri-credit has been raised from ₹1.00 lakh to ₹1.60 lakh. Union Minister of Agriculture and Farmers' Welfare Narendra Singh Tomar said this in the Lok Sabha in answer to a question on improving farmers' access to agricultural loans on December 14, 2021.

"Both the claims are hollow. Allahabad Bank made me pay ₹1,700 for my Kisan Credit Card (KCC) this May," says Hirawan, a farmer from Khargaura village in Shravasti district of Uttar Pradesh. "I also had to mortgage my 0.5 hectare (ha) farmland as collateral to avail a loan of ₹65,000. They have given me a cheque of only ₹60,000, saying that ₹5,000 will remain in the KCC account from which interest will be deducted," he adds.

India has several Central and state-level schemes offering farm loans, but almost all agricultural loans for day-to-day crop cultivation are disbursed through KCCS (see For all farming needs'). To understand the guidelines banks follow while issuing KCCs and the fee they charge, Down To Earth (DTE), between March and August, filed multiple queries under the Right To Information Act 2005 to the Reserve Bank of India (RBI) and two of the country's largest public sector banks-the State Bank of India (SBI) and Punjab National Bank (PNB). The responses also contradict the minister's statement in the Lok Sabha.