Page 104 - economic review

AGRICULTURE AND ALLIED SECTORS76

• support to Cooperative Banks and Regional Rural Banks with an initial corpus of ` 5,000 crore.
• RBI has advised banks to waive margin/security requirements for agricultural loans upto

` 1 lakh.

Rate of Interest on Agricultural Loan:

2.156 From Kharif 2006-07, farmers are receiving crop loans upto a principal amount of Rs ` lakh at
7% rate of interest. During the financial year, 2010-11 Government provided additional 2% interest
subvention as incentive to those farmers who repay their crop loans on time which was enhanced to
3 percent in 2011-12. Thus the effective rate of interest for such farmers is 4 percent per annum. The
interest subvention scheme for short-term crop loans has been continued for the year 2013-14 and a
farmer who repays the loan on time will be able to get crop loan at 4 percent per annum. Government
has extended the scheme to crop loans borrowed from private sector scheduled commercial banks
in respect of loans given with the service area of the branch concerned.

Benefit of Interest Subvention against Negotiable Warehouse Receipt

2.157 At present concessional crop loan @7% with interest rate subvention is available to farmers as
pre-harvest loan. However, in case of post-harvest loan against the negotiable warehouse receipts,
the farmers are granted loan at commercial rates. In order to discourage distress sale by farmers
and to encourage them to store their produce in warehousing against warehouse receipts, the benefit
of interest subvention will be available to small and marginal farmers having Kisan Credit Card for
a further period of upto six month post harvest on the same rate as available to crop loan against
negotiable warehouse receipt for keeping their produce in warehouses.

2.158 In Kerala Co-operative and Commercial Banks constitute two equally strong arms of the
organized credit structure. The short and medium term co-operative credit structure comprises of a
three tier system with the State Co-op. bank at the apex, 14 District Co-operative Banks and 1638
Primary Agricultural Credit Societies at the grass root level. Kerala State Co-operative Agricultural
and Rural Development Bank along with 63 Primary Co-op. Agricultural and Rural Development
Banks operating at the Taluk level constitute long term co-op. credit structure. The Commercial
Banking sector operates concurrently with the cooperative banks and one RRB to cater to the needs
of short term and long term financial needs of farmer households.

2.159 Among these cooperatives have been the oldest and the most dominant source until bank
nationalization .From then on commercial banks have taken the lead role in disbursement of
agricultural credit , their share in the total agricultural credit consistently increasing. Commercial
banks continue to be the top most contributor for the last 10 years, followed by cooperative banks ,
RRBs and others, although, their respective shares in the total advances have undergone a change
with the share of commercial banks increasing from 51 per cent in 2001 to 68.35 per cent in 2012-
13, while that of the other two falling ( RRBs share fell from 14 per cent to 8 per cent and that of
cooperatives from 34.2 per cent to 22.6 per cent in 2012-13. Also,the share of cooperative banks
in the number of accounts is mere 8.32 per cent while that of Commercial banks is 74.4 per cent
while that of RRBs is 16.04 per cent. This is a pointer to the fact that despite concerted efforts,
cooperatives have failed to make a serious impact on the lives of rural households. Details are given
in Appendix 2.78.

Kissan Credit Cards

2.160 The Kissan Credit Card scheme is one major instrument through which credit was dis-
bursed by these agencies in the state. As per the reports available with SLBC, 407082 KCCS with
an amount of ` 4875 crores have been issued during the year 2013-14 by the banking sector in

Kerala State Planning Board