59
Another distinct feature of the trends in agricultural credit in this phase
of “doubling” is that the burden has entirely fallen on scheduled commercial
banks. No doubt, with reorganisation and consolidation of RRBs in recent years,
they have been able to play an improved role; their share in total agricultural
credit has somewhat increased from 9.9% in 2004-05 to 10.7% in 2011-12. The
sustaining of RRBs’ share has a regional dimension, which is that the benefits
of higher agricultural credit would have gone to relatively under-developed and
under-banked regions. But, the largest increase in shares has taken place in
the case of commercial banks, from 65.0% to 72.4% during the same period
and this has been entirely at the cost of cooperative institutions, the share of
which has slipped from 24.9% to 16.9% (Table 4.3).
Loan Waiver and Interest Subvention Schemes For Agricultural Sector
Apart from the policy of faster credit flow to the farm sector, the
Government of India initiated a policy of interest rate subvention with effect
from 2006-07 kharif
operations. According to this facility, the Government
decided to ensure that the farmer received short-term credit at an interest
of 7% per annum, for an upper limit of
`
3 lakh as principal amount, with an
interest subvention of 2 percentage points. The Government would provide
the subvention to NABARD in respect of loans disbursed by cooperatives and
RRBs and to the RBI in respect of loans disbursed by commercial banks as
these apex institutions operate refinance facilities for the respective sets of
institutions. Also, for a period prior to this, that is, kharif and
rabi
seasons
of 2005-06 too, the government granted relief of an amount equivalent to 2
percentage points of a borrower’s interest rate liability on the principal amount
of up to
`
One lakh; the amount was credited to the borrower’s bank account
before March 31, 2006.
Now, for the past six years 2007-08 to 2012-13, the Government have
not only continued with the interest rate subvention scheme but even expanded
it. In 2009-10, they introduced an additional subvention of 1% for those
borrowers who repay their short-term crop loans on time within a year. This
1% additional subvention was raised to 2% in 2010-11 and to 3% in 2011-12.
In 2012-13, the 3% additional subvention was extended to post-harvest loans
against warehouse receipts
8
. Thus, today any farmer who borrows up to
`
3
lakh as short-term crop loan and repays loans on time within a year gets such
loan at 4% rate of interest.
8
These interest subvention schemes have been extended to another 2013-14 as per the budget
speech of the year.
