1. Over the last few decades India has embarked on a journey towards providing improved access to affordable and hassle free credit for agriculture. The importance of timely and adequate credit for the sector for ensuring viability of agricultural activities on the one hand as also to ensure food security of the nation on the other cannot be undermined. Kisan Credit Card (KCC), a transparent credit instrument introduced in 1998-99 has further enhanced accessibility of agriculture credit in a hassle free manner. Further, efforts are also made to ensure that every farmer is in possession of a KCC so that that all farmers are assured of timely credit. The cornerstone of agriculture credit is the Scale of Finance (SoF) being fixed for every crop at the district level which forms the basis for determining the eligible credit for each crop and farmer. The limit for KCC is also decided based on the scale of finance, crop grown and area cultivated. The system of fixing scale of finance is in vogue for the last several decades with the Cooperative Bank in the district taking the lead for the same.
2. As of now the SoF is fixed by the District Level Technical Committee (DLTC), the meeting of which is convened by the District Central Cooperative Bank (DCCB) and generally chaired by the CEO of the DCCB/senior most official present. The Internal Working Group constituted by Reserve Bank of India (RBI) to Review Agricultural Credit and to analyse the challenges faced in the agriculture sector stated that there is a need to bring about uniformity and transparency in fixation of scale of finance. The suggestions made were further examined by RBI and NABARD and it has been decided to revise the existing guidelines as enumerated in the following paragraphs.
3. It is now decided that DLTC will continue to play a major role in deciding the SoF and will call for proposals from its members/ all major stakeholders and prepare the agenda for the meeting based on the inputs received from the stakeholders. On approval, the proposals will be forwarded to the State Level Technical Committee (SLTC). The SLTC would review the proposals based on the district level conditions, the characteristic of district /agro-climatic zones etc., and approve the same. The SoF so approved would then be circulated among all stakeholders for its adoption. For wider circulation it may be placed prominently on the website of the SLBC, StCB, DCCB, SCBs and RRBs. Efforts may be made by all concerned to use technology to maximum possible extent to ensure speedy and transparent process for fixing the SoF. The detailed process for the same are enumerated in the following paragraphs.
4. District Level Technical Committee (DLTC)
The District Level Technical Committee (DLTC) shall be constituted by District Administration with District Central Cooperative Banks as its Convener and shall work in alignment with District Consultative Committee (DCC). The District Collector /District Magistrate may be appointed as Chairman of the committee. In his absence, head of the agriculture department of the district may chair the meeting. Membership may consist of LDM, DDM/DDO of NABARD, representative of Agriculture, Animal Husbandry and Fisheries Departments, Major Commercial Banks, Regional Rural Bank, major NGOs and a few progressive farmers in the district concerned. Representatives of KVK/ Agriculture University/ Veterinary University/ Fisheries Colleges or University/ ICAR Regional Research Stations/ ATMA etc. may also be included as regular members of the Committee and be invited for expert technical inputs.
The proposals received from the stake holders or proposed by the technical experts may be placed for the consideration of the committee. The agriculture department shall review the proposals for field crops while the animal husbandry and fisheries departments shall review the proposals for working capital limits under their respective sectors and place it in the Committee. The proposals should be reviewed taking into account the prevailing cost of inputs, productivity and market price of produce and technical inputs from the KVK/ Agriculture University/ Veterinary University/ Fisheries Colleges/ University/ ICAR Research stations, ATMA etc.
c. Fixing of SoF
SoF may be fixed on per Acre basis indicating a range taking into account various aspects including different agro-climatic zones, cropping practices etc. for all important crops grown in the district for different cropping seasons including summer crops, if there are any. Separate scales may also be prescribed for irrigated and unirrigated crops, traditional and modern methods of farming and local variations in farming practices, if any. In districts where organic farming/ natural farming is vogue, separate SoF for the same may also be finalised. In case of Animal Husbandry activities SOF may be fixed per animal / bird basis for all important activities undertaken in the district after giving due consideration to rearing practices in vogue and all recurring expenses required for sustaining production activities. Similarly, for Fishery sector SOF may be fixed based on the average unit size of the investment. Following are some additional measures suggested while fixing the scale of finance:
i. While the district can continue to be the unit for prescription of the scales of finance, different scales may be fixed, should the agro climatic characteristics vary, within a district.
ii. DLTC should build up and maintain a data base and detailed worksheets considered for undertaking the exercise for fixation of realistic scales.
iii. Scales should be fixed with reference to package of practices adopted and the extraneous factors like resource constraints of the banks, should not come into the picture.
iv. There is a need for fixing separate/higher scales of finance for commercial production of seeds by the seed growers, for export oriented horticulture/ floriculture, tissue culture based seedlings, etc.
v. SoF may be fixed for all the crops including horticulture crops, Animal Husbandry activities and Fisheries activities.
vi. Separate SoF may be fixed for "low volume high value" crops like flowers, aromatic/medicinal crops, spices, etc., depending upon the crop feasibility as per agro-climatic conditions, if prevalent in the district.
d. Recommendation to SLTC
DLTC may indicate scales of finance for major crops and working capital loans to allied sector activities and forward their recommendations to State Level Technical Committee for finalisation and adoption.
5. State Level Technical Committee
The State Level Technical Committee (SLTC) may be constituted by Agriculture Production Commissioner (APC) / Secretary, Agriculture Department with State Cooperative Banks as its Convener and shall work in alignment with State Level Bankers Committee (SLBC). The APC / Secretary Agriculture of the state may be the Chairman of the committee and in his absence, the Director, Agriculture may chair the meeting. Membership may consist of State Agriculture Department, Animal Husbandry and Fisheries Departments, State Cooperation Department, Reserve Bank of India, NABARD, SLBC Convenor, Major commercial banks having presence in the State, RRBs, etc. Representatives of Technical institutions like State Agriculture Universities, Veterinary Universities, Fishery University and ICAR Research Institutes in the State may be invited as regular members for the meeting.
The proposals forwarded by the DLTC may be placed for the consideration of the committee. The state agriculture department shall review the proposal for field crops while the animal husbandry and fisheries departments shall review the proposals for working capital limits under their respective sectors and place it in the Committee. Technical inputs may be taken by the departments from the technical institutions like State Agriculture University etc., if considered necessary.
c. Fixing of SoF
The Committee may take an overview of the state and fix realistic scales of finance considering different agro-climatic zones, irrigated/unirrigated areas, methods of cultivation and taking into account local variations and nuances in the cropping pattern, if any, prevalent in districts. Since the cost of cultivation for a farmer using traditional methods of farming and that for a progressive farmer using modern methods of cultivation are different, it is desirable that the SOF may be fixed as a scale indicating the amount admissible as a range. Scale of finance for working capital loans of allied activities may be fixed considering the prevailing practices in different parts of the State and based on the unit size such as per animal/ birds or average unit size of investment.
SLTC may notify the scales of finance for crop loans and the working capital loans for animal husbandry and fisheries sectors. The SoF notification should clearly indicate the district, Agro climatic zone, type of crop, season, conditions in which it is grown etc., format for issuing the notification is furnished in Annexure I. Dissemination of information at the ground level may be ensured by communicating the same to all operating banks and stakeholders and also by placing in the websites as stated in para 3.
DLTC and SLTC may meet annually for finalising the SoF for a year. However, there can be more meetings in a year if need be. The timelines for completing the process is indicated as under and may be followed scrupulously so as to be ready with the new SOF before start of a cropping season.