• India
  • Feb 02

Schemes for institutional credit in agriculture

• The Economic Survey 2024-25 highlights that providing adequate credit support to all farmers, especially small and marginal farmers and vulnerable sections of society, is crucial to improving agricultural productivity and income.

• In the Constitution, Agriculture has been placed as Entry 14 in the State List along with several ancillary matters. The state governments take appropriate measures for development of institutional credit in agriculture. 

• The Union government supplements the efforts of the states through appropriate policy measures, budgetary support and implementation of various schemes and programmes. 

• The Union government has taken several steps to enhance access to institutional credit in agriculture by announcing annual target for agriculture credit in the budget every year.

• In the financial year 2023-24, agricultural credit disbursement reached Rs 25.48 lakh crore.

• In order to boost the credit to the rural sector with the help of effective and hassle-free agriculture credit, the government has been fixing annual targets for Ground Level Agriculture Credit (GLC). 

• Over the past decade (2014-15 to 2023-24), agricultural credit disbursement has witnessed an average annual growth rate of more than 13 per cent, reflecting the increasing financial support extended to the sector. 

• For FY 2024-25 the government of India has set a GLC target of Rs 27.5 lakh crore with a dedicated sub-target of Rs 4.20 lakh crore for allied activities — dairy, poultry, sheep, goat & piggery, fisheries and animal husbandry.

• This marks more than threefold increase in GLC target, which has grown from Rs 8 lakh crore in FY 2014-15 to Rs 27.5 lakh crore in FY 2024-25. 

• This underscores the substantial progress made in agricultural and allied sector credit disbursement, highlighting the effectiveness of targeted credit policies in meeting sectoral demands.

• Against the target of Rs 27.50 lakh crore, agriculture credit to the tune of Rs 19.28 lakh crore has been disbursed as of December 31, 2024, registering 70 per cent achievement.

Kisan Credit Card

• The government of India introduced the Kisan Credit Card (KCC) to enable farmers to meet their short-term working capital requirements promptly and hasslefree. This has helped enhance the working capital flow to agriculture and allied sectors. 

• The KCC scheme was launched in 1998 for issuing Kisan Credit Cards to farmers on the basis of their land holdings for uniform adoption by the banks so that farmers may use them to readily purchase agriculture inputs such as seeds, fertilizers, pesticides, etc and draw cash for their production needs.

• As of March 2024, the country has 7.75 crore operational KCC accounts with a loan outstanding of Rs 9.81 lakh crore. 

• KCC was further extended to meet the working capital needs of fisheries and animal husbandry in 2018-19, along with the enhancement of the limit for collateral-free loans to Rs 1.6 lakh. 

• As of March 31, 2024, as many as 1.24 lakh Kisan Credit Cards and 44.40 lakh Kisan Credit Cards were issued to fisheries and animal husbandry activities, respectively.

Modified Interest Subvention Scheme (MISS)

• The Modified Interest Subvention Scheme (MISS) provides short-term agri-loans through KCC for working capital  requirements at the concessional interest rate of 7 per cent.

• To ensure that the farmers pay a minimal interest rate to the banks, the government introduced the Interest Subvention Scheme (ISS), now renamed Modified Interest Subvention Scheme (MISS), to provide short-term Agri-loans to farmers at concessional interest rates. 

• Under the scheme, farmers are given an upfront interest subvention of 1.5 per cent.

• Therefore, short-term crop loans up to Rs 3 lakh are available to farmers engaged in agriculture and other allied activities at an interest rate of 7 per cent.

• An additional 3 per cent Prompt Repayment Incentive (PRI) is also given to the farmers for prompt and timely repayment of loans. Thus, the effective interest rate comes down to 4 per cent per annum.

Kisan Rin Portal

• The Kisan Rin Portal (KRP) launched in September 2023 addresses key challenges in the Modified Interest Subvention-Kisan Credit Card (MISS-KCC) scheme. 

• Earlier, banks had to submit claims for Interest Subvention (IS) and Prompt Repayment Incentive (PRI) manually to the Reserve Bank of India (RBI) and NABARD, leading to significant delays and inefficiencies. 

• The Kisan Rin Portal digitises this process, ensuring farmers and lending institutions benefit from quicker, seamless transactions, improving access to credit for agricultural needs.

• The portal simplifies the process, enabling access to low-cost credit not only for traditional cropping activities but also for dairy, poultry, fisheries, and beekeeping.

• With the portal, banks can submit automated digital claims, streamlining the entire process. This not only improves efficiency but also helps banks track and manage claims more effectively, facilitating prompt disbursal of benefits.

• The portal’s impact extends to over 453 banks nationwide, with 1.89 lakh branches and 4.65 lakh users actively involved in processing claims.

• By December 31, 2024, it had processed claims worth Rs 108,336.78 crore including Interest Subvention (IS) and PRI. About 5.9 crore farmers that are currently getting benefitted under the MISS-KCC scheme, have been mapped through the portal.

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