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AGRICULTUREFINANCEIN INDIA INTRODUCTION Finance in agriculture is as important as development of technologies.

Technical inputs can be p u r c h a s e d and used by farmer only if he has money (funds). But his own money is always inadequate and he needs outside finance or credit. Professional money lenders were the only source of credit to agriculture till 1935. They use to charge unduly high rates of interest and follow serious practices while giving loans and recovering them. As a result, farmers were heavily burdened with debts and many of them perpetuated debts. There were widespread discontents among farmers against these practices and there were instances of riots also. With the passing of Reserve Bank of India Act 1934, District Central Co-op. Banks Act and Land Development Banks Act, agricultural credit received impetus and there were improvements in agricultural credit. A powerful alternative agency came into being. Large-scale credit became available with reasonable rates of interest at easy terms, both in terms of granting loans and recovery of them. Although the cooperative banks started financing agriculture with their establishments in 1930s real impetus was received only after Independence when suitable legislation were passed and policies were formulated. Thereafter, bank credit to agriculture made phenomenal progress by opening branches in rural areas and attracting deposits. Till 14 major commercial banks were nationalized in 1969, co-operative banks were the main institutional agencies providing finance to agriculture. After nationalization, it was made mandatory for these banks to provide finance to agriculture as a priority sector. These banks undertook special programs of branch expansion and created a network of banking services throughout the country and started financing agriculture on large scale. Thus agriculture credit acquired multi-agency dimension. Development and adoption of new technologies and availability of finance go hand in hand. In bringing "Green Revolution", "White Revolution" and now "Yellow Revolution" finance has played a crucial role. Now the agriculture credit, through multi agency approach has come to stay. The procedures and amount of loans for various purposes have been standardized. Among the various purposes "Crop loans" (Short-term loan) has the major share. In addition, farmers get loans for purchase of electric motor with pump, tractor and other machinery, digging wells or boring wells, installation of pipe lines, drip irrigation, planting fruit orchards, purchase of dairy animals and feeds/fodder for them, poultry, sheep/goat keeping and for many other allied enterprises. AGRICULTURE GROWTH RATE IN INDIA Agriculture Growth Rate in India GDP had been growing earlier but in the last few yearsit is constantly declining. Still, the Growth Rate of Agriculture in India GDP in the share of thecountry's GDP remains the biggest economic sector in the country. India GDP means the totalvalue of all the services and goods that are produced within the territory of the nation within thespecified time period. The country has the GDP of around US$ 1.09 trillion in 2007 and thismakes the Indian economy the twelfth biggest in the whole world.The growth rate of India GDP is 9.4% in 2006- 2007. The agricultural sector has alwaysbeen an important contributor to the India GDP. This is due to the fact that the country is mainlybased on the agriculture sector and employs around 60% of the total workforce in India. Theagricultural sector contributed around 18.6% to India GDP in 2005.Agriculture Growth Rate in India GDP in spite of its decline in the share of the country'sGDP plays a very important role in the all round economic and social development of thecountry. The Growth Rate of the Agriculture Sector in India GDP grew after independence for the government of India placed special emphasis on the sector in its five-year plans. Further theGreen revolution took place in India and this gave a major boost to the agricultural sector for irrigation facilities, provision of agriculture subsidies and credits, and improved technology. Thisin turn helped to increase the Agriculture Growth Rate in India GDP.The agricultural yield increased in India after independence but in the last few years it hasdecreased. This in its turn has declined the Growth Rate of the Agricultural Sector in IndiaGDP. The total production of food grain was 212 million tonnes in 2001- 2002 and the nextyear it declined to 174.2 million tonnes. Agriculture Growth Rate in India GDP declined by 5.2%in 2002- 2003. The Growth Rate of the Agriculture Sector in India GDP grew at the rate of 1.7%each year between 2001- 2002

and 2003- 2004. This shows that Agriculture Growth Rate in India GDP has grown very slowly in the last few years. Agriculture Growth Rate in India GDP has slowed down for the production in this sector has reduced over the years. The agricultural sector has had low production due to a number of factors such as illiteracy, insufficient finance, and inadequate marketing of agricultural products. Further the reasons for the decline in Agriculture Growth Rate in India GDP are that in the sector the average size of the farms is very small which in turn has resulted in low productivity. Also the Growth Rate of the Agricultural Sector in India GDP has declined due to the fact that the sector has not adopted modern technology and agricultural practices. Agriculture Growth Rate in India GDP has also decreased due to the fact that the sector has insufficient irrigation facilities. As a result of this the farmers are dependent on rainfall, which is however very unpredictable. Agriculture Growth Rate in India GDP has declined over the years. The Indian government must take steps to boost the agricultural sector for this in its turn will lead to the growth of Agriculture Growth Rate in India GDP. TYPES OF CREDITS The Credit requirements of agriculture are of three types viz.1. Short -Term2. Medium - Term3. Long- Term (LT) We shall deal with long-term credit in this article. Long Term Credit :The period of long-term credit is generally 5 to 20 years or even more in some special cases. Inany industry, longterm investment is necessary, to create permanent assets which give returnsover a period of time. The permanent investment is not only necessary for a particular industrybut even for the country. Because for continuity of production and progress of the country. Thisapplies to agriculture also. In Agriculture, long-term investment comprises of sinking well, landlevelling, fencing and permanent improvements on land purchase of big machinery like tractor with its attachments including trolleys, establishment of fruit orchard of mango, cashew,coconut, sapota (chiku), orange, pomogranate, fig, guava, etc. There are many other items of longterm capital investment. Investment once made in the beginning continious to give returnsover a long period. Fruit orchards particularly do not give any income in the first 4 - 5 years as incase of other seasonal crops. So the expenditure incurred in the first 4-5 years becomes acapital cost.All the long-term investments mentioned above require large amounts of funds. Although theyhave good potential to give returns in future, individual farmers have no financial capacity tomake such costly investments from their own funds because they have no savings or very littlesavings. Therefore, they have to resort to bank borrowing to meet their such needs. Thefinancial criteria terms and conditons procedures of granting L.T.loans are altogether differentfrom short-term loans : Even the bank or agency providing LT loans is separatedue to itsparticular mode or system of raising capital and graign.Land Development Banks :The special banks providing LT Loans are called Land Development Banks (LDA). The historyof LDBs is quite old. The first LDB was started at Jhang in Punjab in 1920. But the real impetusto these banks was received after passing the Land Mortgage Banks Act in 1930s (LDBs wereoriginally called Land Mortgage Banks). After passing this Act LDBs were started in differentstates of India.Structure :These Banks have two-tier structure1. Primary Land Development Bank at district level with branches at taluka level.2. Control or State Land Development Bank. All primary Land Development Banks are federatedinto Central Land Development Bank at the State Level. In some States, there is Unitarystructure wherein, there is only one State Land Development Bank at the state level operatingthrough its branches and sub-branches at district and below levels.Raising Funds :The main function of raising funds is carried out be the Central or State Land DevelopmentBank which can really deal with the money market of the country effectively and advance loansto primary LDBs. The sources of funds of State LDBs are:-1. Share capital.2. Issue of debentures3. Loans from NABARD4. Reimbursements of subsidies from the Govt.5. Other funds. Issue of debentures is the main source of funds for the LDBs. Debentures is a `Bond conveyingand acknowledging the debt and also containing the provision of promise for payment of interestat stipulated rate and return of the principal amount. The period of debentures varies from 7 to15 years. As LDBs require funds of longer duration to advance

LT loans to borrowers, thedebenture is a convenient instrument of raising funds. Because it guarantees that funds willremain with the Banks for a specified period.There are three types of debentures:-1. Regular debentures2. Rural debentures3. Special development debentures.These debentures are mostly purchased by financial institutions like LIC, Commercial Banks,Co-op. Banks, NABARD, and State Govts. As there is limited response from the public. TheState Govt. give incentive subsidies for many development activities by individual farmer including purchase of tractor. The amounts of subsidies are reimbursed to the LDBs.Interest rate :The rates of interest for LT Loans are generally low and within the paying capacity of farmers.They are around 11 to 12%.Loan Procedure :The Branch offices receive applications from the prospective borrower. Then AgriculturalFinance Officer or Inspector scrutinises these applications, they visit places of the applicationand ascertain the purpose of borrowing, verify the genuineness of the proposal and it economicviability, repaying ability of the farmers, adequacy of security,etc. After completing thoseformalities, the loan is granted by the appropriate authority at appropriate level depending uponthe delegation of powers by the Banks. CROP LOAN Crop loan is a short term credit and is generally obtained from primary credit co-op. Society of avillage or also from commercial bank. The period of loan is about one year except for sugarcanefor which the period is 18 months. There are two criteria for granting crop loan.1 . O n e t h i r d o f g r o s s v a l u e 2 . C o s t o f c u l t i v a t i o n . 1.One third of gross value approach takes into account the yield and price of the crop, its cost of cultivation and family expenditure. If the gross value is more, more amount of loan becomes available. For e.g. Rice.IIIY i e l d ( Q . ) 2 0 2 5 P r i c e ( R s / Q ) 4 0 0 4 0 0 Gross value (Rs.)800010,000O n e t h i r d ( R s . ) 2 7 0 0 3 3 3 0 2.Thus in second situation farmer is entitled for Rs.3330 per hectare which is higher thanin the first situation. Thus this method takes into account the productive aspect of a crop.3.In cost of cultivation, direct paid-out costs are only considered. They include items, likeseeds, manures, fertilizers, pesticides, diesel/electricity, hired labour etc. In thisapproach, it is expected that all direct costs to be incurred by the farmer should becovered and accordingly he should get adequate credit. If the cost of all these items of input is Rs.3500/-. If the loan is granted according to first approach, then the amountwhich is short, is spent by the farmer from his own funds. Since crop loan is for oneseason, its recovery is made in one installment after the harvest of the crop. Crop loan isan annual requirement and farmer has to borrow fresh loan for new crop season everytime. Therefore, he has to repay the earlier loan with interest within stipulated time.Since this loan is required every season/every year, the procedure of getting this loan issimple and convenient and it is made available by the District Central Co-op.Banksthrough the village Co-op. Credit Society. So the farmer gets his loan in the village itself.If the loan is to be taken from commercial bank, it is available from the nearby branch of the commercial bank. As for security, the farmer has to offer his land as a security. Thereis a three tier structure providing crop-loans through co-operative institutions.Appex Bank- State Co-op. Bank.District Central co-op. BankVillage co-op. Credit Society.Crop-loan is the most important need of the farmer to increase and maintain hisproductive ability. With the help of this loan amount, he can purchase modern costlyinputs and adopt new technologies on his farms. So through these loans co-operativebanks play important role in the development and prosperity of agriculture. Among thevarious types of bank loans to agriculture, the share of crop loan is the highest. AGRICULTURAL LOANS Agricultural loans are available for a multitude of farming purposes. Farmers may applyfor loans to buy inputs for the cultivation of food grain crops as well as for horticulture,aquaculture, animal husbandry, floriculture and sericulture businesses. There are also specialloans to finance the purchase of agricultural machinery such as tractors, harvesters and trucks.Construction of biogas plants and irrigation systems as well as the

purchase of agricultural landmay also be financed through special types of agricultural finance. COOPERATIVE AGRICULTURAL BANK 1. National Bank for Agriculture and Rural Development or NABARD - isresponsible for refinance disbursement to commercial banks, State cooperative banks,State cooperatives, rural development banks, Regional Rural Banks (RRBs) and other eligible financial institutions. It also sanctions money through its Rural InfrastructureDevelopment Fund for projects covering irrigation, rural roads and bridges, health andeducation, soil conservation and drinking water schemes. NABARD also offers a KisanCredit Card Scheme and crop loans under the Rashtriya Krishi Bima Yojana. Banks and RRB's introduced the Kisan Credit Card Scheme of NABARD in their areas of operation. In this scheme eligible farmers are provided with a Kisan Credit Card and apassbook or card-cum-pass book. The revolving cash credit facility allows any number of withdrawals and repayments within the limit. This limit is fixed on the basis of operationalland holding, cropping pattern and the scale of finance. Sub-limits may be fixed at thediscretion of banks.This Kisan Credit Card is valid for 3 years subject to annual review. As incentive for goodperformance, credit limits may be enhanced to take care of increase in costs, change incropping pattern, etc. Each drawl should be repaid within a maximum period of 12months. Conversion or rescheduling of loans is allowed in case of damage to crops dueto natural calamities. Security, margin, rate of interest and other details are fixedaccording to RBI norms. 2. Bihar State Co-operative Bank Limited (BSCB) - Offers a range of loansand financial schemes to agriculturalists. 3. Haryana State Co-operative Apex Bank Limited (HARCOBANK) - Thebank offers crop loans, Kisan Credit Cards, cash credit against hypothecation of stocksand interim finance by way of cash credit. 4. National Federation of State Co-operative Banks Limited (NAFSCOB) - This federation offers a range of agricultural loans through member State CooperativeBanks, District Central Cooperative Banks and Primary Agricultural CooperativeSocieties. 5. Orissa State Co-operative Bank Limited (OSCB) - The bank hasintroduced Kisan Credit Cards in the S.T. Cooperative Credit Sector. It also organizesseminars on agri finance. OSCB has 17 Central Cooperative Banks and around 810 minibanks in different districts of Orissa. 6. Repatriates Co-operative Finance and Development Bank Limited -This bank does not have any specific agricultural loan, but offers a range of financialproducts that can be accessed by people who wish to develop agriculture and relatedactivities. 7. Punjab State Cooperative Agriculture Development Bank Ltd - Initially,the bank only gave farmers loans to pay off old debts and purchase land. Today, thebank provides loans for various purposes like improvement of alkaline and saline lands,purchase of tractors, installing tube wells and other modern agricultural equipment. Italso offers financial schemes for poultry development, dairy development, horticulture,floriculture, sheep rearing and inland fisheries. 8. Andhra Pradesh State Cooperative Bank Limited (APCOB) - has a loanportfolio that covers crop loans, medium term loans and long term loans for agriculturalpurposes. It also supports government sponsored District Rural Development

Agencyprojects through IRDP loans and cooperative sugar factories, spinning mills, weaver'ssocieties, employees' cooperative credit societies and other organizations. APCOB hasalso extended finance to apex cooperative institutions in the State such as APCO,MARKFED and GCC. NATIONALISED BANKS 1. Allahabad Bank - offers the Kisan Credit Card and Kisan Shakti Yojana Scheme.The Kisan Credit Card is a unique scheme for farmers through which they can draw acash loan for crop production as well as domestic needs from the card-issuing branchwithin the sanctioned limit. The Kisan Shakti Yojana provides farm investment credit, aswell as personal/domestic loans including repayment of debt to moneylenders. Thepermissible loan limit will be 50 per cent of the value of land or 5 times the net farmincome, whichever is lower, less the outstanding amount, if any, in Agril. 2. Andhra Bank - provides facilities to farmers like AB Kisan Vikas Card, AB PattabhiAgricard, AB Kisan Chakra, rural godowns, agri clinics, agri service centres, self helpgroups and solar cookers. They also provide other schemes such as Kisan Sampathi,tractor financing, Kisan Green Card, Surya Sakhti and loans to dairy agents. 3. Bank of Baroda - offers farmers the Baroda Kisan Credit Card. It also has schemesfor the purchase of agricultural implements, heavy agricultural machinery like tractors,irrigation and other infrastructure. Bank of Baroda also finances the development of agriindustries like horticulture, sericulture, fisheries, dairy and poultry. 4. Bank of India - has a Kisan Credit Card Scheme that helps farmers raise short-termfunds for agriculture and other farm-based activities, on an on-going basis, with veryflexible and friendly repayment terms. It also offers an agricultural loan for developmentof agriculture related industries, purchase of machinery and other agricultural purposes. 5. Bank of Maharashtra - offers agriculturists a Mahabank Kisan Credit Card andfinancial schemes for digging new wells, purchasing harvesters, livestock, vehicles andland. Repayment terms for different agricultural loans range from three to fifteen years. 6. Canara Bank - provides Kisan Credit Cards. Limits up to 50,000 have no marginwhile those above 50,000 have a margin of 15 to 20 percent. Other than this, CanaraBank provides a wide array of financial schemes for different agricultural purposes. 7. Central Bank of India - The Central Kisan Credit Card is a credit service providedto farmers on the basis of their holdings for purchasing agricultural inputs. Only thosefarmers having a good track record for the past 2 years with the bank as a borrower or depositor and who are not defaulters to any credit institution would be considered for loans. 8. Corporation Bank - offers a range of loan schemes to farmers. They are the CorpGram Mitra Yojana, Corp Arthias Loan Yojana, Corp Kisan Tie-Up Loan Scheme, CorpKisan Farm Mechanisation Scheme and Corp Kisan Vehicle Loan Yojna. 9. Dena Bank

- Dena Bank has sponsored 2 Regional Rural Banks namely DenaGujarat Gramin Bank in Gujarat and Durg Rajnandgaon Gramin Bank (DRGB) inChhattisgarh. The bank has set up a Rural Development Foundation for trainingunemployed youth in rural areas. Other financial schemes of the bank are the DenaSwacch Gram Yojana, Dena Kisan Gold Credit Card Scheme and the Dena BhumiheenKisan Credit Card Scheme. 10. Indian Bank - has a wide range of schemes for agriculturalists such as Swarojgar Credit Card, Gramin Mahila Sowbhagya Scheme, Kisan Bike Loan Scheme, Yuva KisanVidya Nidhi Yojana and Indian Bank Kisan Card Scheme. 11. Indian Overseas Bank - offers agri business consultancy services that includeconducting feasibility and market studies, preparation of detailed project reports andformulation of rehabilitation packages for sick agro units. 12. Oriental Bank of Commerce - It has two agricultural projects - the GrameenProject and the Comprehensive Village Development Programme. The Grameen Projectinvolves disbursing small loans ranging from Rs. 75 onwards to mostly women. Trainingis also provided in villages in using locally available raw material to produce pickles and jams. The Comprehensive Village Development Programme focuses on providing anintegrated package of rural finance to villagers to build up their village. 13. Punjab and Sind Bank - offers a range of financial schemes for farmers like theZimidara Credit Card, tractor finance scheme, drip irrigation scheme, Kheti UdyogKhazana Yojana, vermi composting scheme, horticulture clinic and private veterinaryclinic with dairy unit scheme. 14. Punjab National Bank - This bank has a special website called PNB Krishi for agriculturalists. It gives details on crop practices, plant protection, farm machinery,market prices and other farming news and activities. The website also provides a list of financial schemes offered by Punjab National Bank on production credit, investmentcredit, composite loans, animal husbandry and farm mechanization. 15. Syndicate Bank - offers a wide range of agricultural loan products such as theSynd Jai Kisan Loan Scheme, Jewel Loan Scheme for Agriculture, Syndicate FarmHouse Scheme, Finance for Hi-tech Agriculture, Development of Irrigation Infrastructurescheme, Syndicate 2/3/4 Wheelers Scheme and the Syndicate Kisan Credit Card(S.K.C.C). 16. UCO Bank - This Bank provides the UCO Hirak Jayanti Krishi Yojana to meet thelong-term credit needs of the farming community in rural areas for agriculture, alliedactivities as well as for personal purposes. Only farmers below 60 years are eligible toapply. Minimum quantum of the loan is Rs. 25,000/- and the maximum is Rs. 5 lakhs. 17. Union Bank of India - Facilities provided to farmers include Kisan ATM Cards andspecial Kisan ATM Machines. These ATM's are easy to operate and do not requirefarmers to have a high level of literacy. They are voice enabled in the local language,have a touch screen monitor and work on a bio-metric authentication system like finger print verification. 18. United Bank of India

- The range of financial schemes offered to agriculturalistsinclude the United Krishi Laghu Paribahan Yojana, United Krishi Sahayak Yojana, UnitedGramyashree Yojana, Gramin Bhandaran Yojana and the United Bhumiheen KisanCredit Card. 19. Vijaya Bank - This bank offers one comprehensive financial scheme known as theVijaya Krishi Vikas (VKV) Scheme. This scheme provides a simple package to farmersto meet entire agricultural credit requirements such as crop production, investment creditand consumption credit. All farmers including owners, tenant cultivators, leased landfarmers and sharecroppers are eligible for this scheme. SCHEMES FOR AGRICULTURE FINANCE 1. SBT KISAN GOLD CARD SCHEME (General purpose Agriculture TermLoan) ELIGIBILITYa. Farmers having good track record of repayment for the last two years.b. Farmers who have closed their loan account without default and not our current borrowers.c. Farmers who have defaulted in repayment but closed the Loan within the stipulatedrepayment period.d. Farmers who are maintaining deposits with the Bank.e. Good borrowers of other banks provided they liquidate their dues with other banks.f. Good farmers who have not availed loans from any bank.PURPOSEThe borrower is at liberty to utilize 50% of the amount for any purpose, including consumptionpurpose and purchase of land. AMOUNT OF LOANThe amount of loan is limited to five times the annual farm income including income from alliedactivities or 50% of the value of the land offered as collateral security, whichever is less, subjectto a maximum of Rs.10 lakh.RATE OF INTERESTInterest rate ranges from 1% below PLR.SECURITYHypothecation of crops and assets, if any, created out of bank finance and existingmovable assets such as milch animals, pump sets etc.The loan will be secured by equitable mortgage of properties worth double the loanamount, or term deposit receipts, LIC policies of adequate surrender value, NSCscompleted lock in period or more etc.DISBURSEMENTCash disbursals are allowed to the full extent of the credit limit.REPAYMENTThe repayment period shall be 10 years. The due date of the instalment shall be fixed in such away to coincide with the date of generation of income.2. KISAN CREDIT CARD SCHEME ELIGIBILITYAll agriculturists who are in need of short term production requirements. ATM facility andPersonal Accident Insurance Scheme for life up to Rs.50000/- and permanent disability cover upto Rs.25000/- is available on request.PURPOSETo provide hassle free short-term credit to farmers on the basis of their land holdings for purchase of inputs and draw cash to meet their production needs. i.e. Cultivation expensesincluding allied activities with a consumption component.AMOUNT OF LOANTo be fixed on the basis of operational holdings and scale of finance with consumptioncomponent 15% (maximum Ra.10000/-) of production credit. The scale of finance to farmerswho own cultivated land below one acre will be at the rate of Rs.40000/- (on pro rata basis) andfarmers who own more than one acre with intensive farming of land be given at the rate of Rs.37500/- per acre and part thereof.RATE OF INTERESTInterest rate ranges from 2.50% below to 1.50% above BPLR for various limits.REPAYMENT Running Cash Credit account for 36 months subject to annual review and total annual creditshould exceed annual debit.3. HOMESTEAD FARMING PURPOSEA scheme for financing farmers practicing mixed cropping / inter cropping along with alliedactivities to enable them to undertake cultivation of various crops in a more integrated way. Thescheme provides the farmers with sufficient working capital required for their homestead farming(Mixed cropping along with allied activities) by fixing scale of finance based on land holding tomeet the cost of entire farming activities.AMOUNT OF LOANThe farmers who own cultivated land below one acre be given the scale of finance on pro ratabasis at the rate of Rs.40000/- and farmers who own more than one acre of land be given at therate of Rs.37500/- per acre and part thereof.RATE OF INTERESTInterest rate

ranges from 2.50% below to 1.50% above BPLR for various limits.REPAYMENTThe facility will be sanctioned as an Agriculture Cash Credit limit (In case of Kisan Credit Cardrunning cash credit).4. LOAN FOR ESTATE PURCHASE ELIGIBILITYThe estate should be either in yielding stage with the crops in its prime yield age or capable of being developed in to a viable unit. The yield / net income of the estate should be sufficient toliquidate the proposed loan and interest accrued with in a period of 7 to 10 years. The proposedestate should be free from encumbrance and entire property should be offered as security to theloan.PURPOSETo encourage those who prefer to settle down in agriculture and are in the look out of good /viable estates for purchase and also to improve production in agriculture.AMOUNT OF LOANThe quantum of loan that will be considered for sanction will be 75% of the registered value or 50% of the market value whichever is low. In exceptional cases 80% of the registered value or 50% of the market share whichever is low is also considered. The loan for the development of the estate like land development including working capital can also be sanctioned.RATE OF INTERESTInterest rate same as BPLR REPAYMENTRepayment of loan will be in quarterly/half yearly / yearly instalments depending on the harvestof the crops and the loan shall be repaid within a maximum period of 7 to 10 years.5. S C H E M E F O R F I N A N C I N G F A R M E R S F O R P U R C H A S E O F L A N D FOR AGRICULTURAL PURPOSES ELIGIBILITYSmall and Marginal farmers - land maximum upto 5 acres of non-irrigated land or 2.5 acres of irrigated land including the land purchased under the scheme. Tenant, sharecropper andlandless agricultural labourers with a good record of prompt repayment of our loans for the last2 years are also eligible.PURPOSETo finance small and marginal farmers, share croppers, tenant cultivators for purchasing land toexpand activities and to make existing small and marginal units economically viable to bringfallow lands and waste lands under cultivation to step up agricultural production as well asproductivity also to finance share croppers / tenant farmers to enable them to diversifyfarming activities to allied areas to increase their income.AMOUNT OF LOANMaximum loan under the scheme towards land cost shall not exceed Rs 5 lakh. Cost of development/economic activity shall be financed under the banks other financing schemes.RATE OF INTERESTInterest rate ranges from 1.75% below to 2.00% above BPLR for various limits.REPAYMENTRepayment of the loan will be 7 to 12 years in half yearly / yearly installments with maximum of 24 months moratorium period. Gestation period / repayment due dates etc will be fixedaccording to income generation from the activity.6. SCHEME FOR CULTIVATION OF MEDICINAL PLANTS ELIGIBILITYAll agriculturists are eligible.PURPOSEScheme for financing cultivation of 22 medicinal plants cultivated extensively and also in greatdemand in the local as well as foreign market.AMOUNT OF LOANDepending on the area of cultivation / project costRATE OF INTERESTInterest rate ranges from 1.75% below to 2.00% above BPLR for various limits. REPAYMENTRepayment should coincide with harvesting and marketing or at the time generation of incomefrom the scheme.7. SCHEME FOR CULTIVATION OF VANILLA ELIGIBILITYAll agriculturists are eligible.PURPOSEScheme for financing cultivation of Vanilla, a cash crop, gaining ground in the State of Kerala.AMOUNT OF LOANAmount of finance will be Rs.250000/- per hectare for pure crops and Rs.210000/- per hectarefor intercrop.RATE OF INTERESTNormal rate of interest as applicable to ATLREPAYMENTThe loan shall be repaid within a period of 7 years, in yearly instalments. Farmers eligible for two years gestation period and interest is repayable on the 3 rd and 4 th year and the principalfrom the 5 th

to 7the year.8. SBT RAIN WATER HARVESTING SCHEME ELIGIBILITYFarmers having land holding of 0.50 acre or more are eligible to be considered for finance under this scheme.PURPOSEScheme envisages construction of low cost tanks for collecting and storing rainwater and usingit for irrigation, by siphon arrangement, utilizing gravitation flow or by installing motor pump.AMOUNT OF LOANMaximum amount of finance will be Rs.88000/- per acre. Scheme can be adopted in smaller areas also by reducing the cost proportionately.RATE OF INTERESTInterest rate ranges from 1.75% below to 2.00% above BPLR for various limits.REPAYMENTRepayment based on the income generated from the crops raised and and cropping pattern.The maximum period eligible for repayment is 8 years in annual instalments.9. PRODUCE MARKETING LOAN (Advance against Warehouse Receipt) ELIGIBILITYa. Farmers / traders depositing farm produce in the warehouses of the central / statewarehousing corporations.a. Scheme will be operative in Karnataka, Andhra Pradesh, Tamilnadu & Kerala.PURPOSEa. To protect the farmers from the compulsion to sell their produce immediately after harvest of produce despite an adverse market.b. To finance farmers and traders against warehouse receipt.AMOUNT OF LOAN70% of the value of the warehouse receipt, valued at the market value or 70% of the marketprice advised by Agri. Dept, HO whichever is less.RATE OF INTERESTFarmersUp to Rs.3 lakh - 3.50% below PLR 9.50%Above Rs.3 lakh - 2.50% below PLR 10.50%Traders2.50% below PLR 10.50% (Irrespective of the limit)REPAYMENTOn demand / 6 months which can be extended up to 12 months subject to satisfactory shelf life /market condition.10. AGRI. LOAN TO NON-RESIDENT INDIANS ELIGIBILITYAgricultural advances are available to the resident family members (means spouse, father,mother, brother, sister etc.) of Non-Resident Indians for land-based activities in respect of theland held by them in India subject to:a. the loan should be need based and the total land holding of the Non-Resident Indian,in individual name or jointly with others, should not exceed 5 ha.b. The loan amount shall not be used for acquiring any additional land.PURPOSETo finance farmers only for land-based activities and to carryon agricultural activities on theexisting land.AMOUNT OF LOANThe maximum amount of the loan will be need based.RATE OF INTERESTInterest rate ranges from 2.50% below to 1.50% above BPLR for various short-term limits andfrom 1.75% below to 2.00% above BPLR for various long-term limits.REPAYMENT The loan can be repaid out of the income generated from the agricultural activities or remittances from abroad or by debit to their NRE/NRO/FCNR accounts.11. MINOR IRRIGATION Projects with cumulative command area of less than 2000 ha are called minor irrigation projectsELIGIBILITYThe beneficiary should have a minimum of 50 cents of land to be brought under irrigation toensure viability and repayment of loan.PURPOSEScheme for developing irrigation potential, Minor Irrigation, Installation of Pump set DripIrrigation etc.AMOUNT OF LOANAs per the project submitted.RATE OF INTERESTInterest rate ranges from 1.75% below to 2.00% above BPLR for various limits.REPAYMENTThe loan shall be repaid within a period of 9 years, in yearly instalments.12. FARM MECHANISATION Loan for Farm Mechanisation, Purchase of tractors, Power Tillers, etc.ELIGIBILITYa. Tractors with engine capacity up to 35 HP The applicant should own / cultivate sixacres of perennially irrigated land.b. Tractors with engine capacity above 35 HP The applicant should own / cultivate eightacres of perennially irrigated land.c. Power Tillers the applicant should own / cultivate four acres of perennially irrigatedland.PURPOSETo purchase tractor / power tillers for agricultural activities.AMOUNT OF LOANAmount of advance will be the investment cost of tractor / power tiller and implements lessmargin @15%.RATE OF INTERESTInterest rate ranges from 1.75% below to 2.00% above BPLR for various limits.REPAYMENTThe period of repayment shall be 9 years for tractors and 7 years for power tillers. 13.

AGRICULTURE GOLD LOAN ELIGIBILITYAll individual farmers undertaking cultivation or other activities including allied activities areeligible for short-term finance.PURPOSETo meet genuine credit requirements of farming including allied activities, repairing of equipments and consumption needs etc.AMOUNT OF LOANThe eligible loan amount should be assessed based on the area under cultivation, crops(s)raised, scale of finance and not in relation to the value of gold offered as security.RATE OF INTERESTInterest rate ranges from 2.50% below to 1.50% above BPLR for various limits. For workingcapital loans like ACC/KCC/AGL up to Rs.3 lakh interest at the rate of 7% is extended as per RBI guidelines subject to the periods stipulated by RBI and beyond that normal rate will apply.REPAYMENTAs applicable to Agri. Cash Credit accounts depending on the duration of crops raised andharvesting period and income generation, subject to a maximum period of 12 months. Theaccount has to be closed at the end of the repayment period.14. SCHEME FOR DEVELOPMENT / STRENGTHENING OF AGRI.MARKETING INFRASTRUCTURE, GRADING AND STANDARDIZATION ELIGIBILITYScheme shall be available to individuals, groups of farmers / growers / consumers, partnership /partnership firms, NGOs, SHG, Companies, Corporations, Cooperatives, Co-marketingFederations, Local Bodies etc.PURPOSEFor development of agricultural marketing operations including strengthening of infrastructure,techniques of preservation, storage etc.AMOUNT OF LOANAs per the projectRATE OF INTERESTBPLR irrespective of credit size.REPAYMENTAdequate long-term repayment period according to the project. 15. CONSTRUCTION / RENOVATION / EXPANSION OF RURALGODOWN ELIGIBILITYThe project for construction of rural godowns can be taken up by Individuals, Farmers, Group of farmers/growers, Partnership / Proprietary firms, NGOs, SHGs, Companies, Corporations, Co-operatives, Federations, Agricultural Produce Marketing Committees, Marketing Boards andAgro Processing Corporations.PURPOSETo create scientific storage capacity with allied facilities in rural areas to meet the requirementsof farmers for storing farm produce, processed farm produce and agricultural inputs.AMOUNT OF LOANAs per the project.RATE OF INTERESTAs applicable to advances under SIB / C&I segments will be charged.REPAYMENTAdequate long-term repayment period, not less than 5 years including a grace period of oneyear. CONCLUSION Both the co-operative banks advance creditmostly to agriculture. First bank advancesshortterm and medium term loans while thesecond bank advances long-term loans. TheReserve Bank of India as the Central bank of the country took lead in making credit availableto agriculture through these banks by layingdown suitable policies.

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