40
was clearly visible that the quantum of land offered for KCC, the cropping
pattern indicated therein, and the scale of finance for the crops specified
were written in a very causal manner or some of the items were not even
recorded/ missing in the appraisal form.
(ii) As already indicated in para 3.22, sometimes the exercise of calculating the
KCC limits turns out to be futile when a cap of Rs. 1.0 lakh is put to avoid
land mortgage or a cap of Rs. 3.0 lakh is imposed by the farmers themselves
due to non-availability of interest subvention beyond this amount. Another
issue with the land mortgage was that banks were mortgaging the entire
land offered by the farmer for KCC loan irrespective of the value of the
mortgaged land. Banks should take into the account the value of land vis-à-
vis the quantum of security/ collateral required to secure the loan (over and
above Rs. 1.0 lakh). Therefore, some farmers were hesitant to avail KCC
loan beyond Rs. 1.0 lakh.
(iii) Since the components of consumption & asset maintenance were not
eligible for interest subvention and were fetching higher rate of interest
as compared to crop loan component, these components were required
to be shown by the banks either in a separate account or as a sub-limit of
KCC limit. However, the same was not being practiced by the bankers. The
bankers opined that since the CBS platform used by various banks (banks
visited by the study team) did not have the option of sub-limit within the
overall KCC limit, it was not possible for them to keep separate records
online for crop loan component and consumption cum asset maintenance
component. Therefore, the KCC limit sanctioned to the farmers was either
exclusive crop loan limits (if other two components were not considered/
sanctioned) or a cumulative of crop loan plus consumption plus asset
maintenance and the entire amount was shown as ‘crop loan component’.
(iv) Non-satisfactory recovery of loans was also observed to be one of the major
reasons for not sanctioning KCC beyond a limit. In UP, State Government
had issued a notification that if land was required to be sold by the banks
for recovery of dues, the farmer should be left with a minimum land parcel
of 3.15 acre. However, since majority of farmers in the state were marginal
and small farmers, banks could not get the required permission from the
Tehsildar
to sell the land of the farmers to recover their dues.
Season-wise sub limit
3.25 Season-wise crop loan limit was being fixed by the cooperative banks (Table
3.6) in all the states selected for the study. This was normally done because of
resource crunch at the DCCB level as also to ensure better recovery of dues from
the farmers. Although some commercial banks & RRBs in UP and Assam had
also indicated the season-wise crop loan limits in the KCC loan application cum
appraisal forms, the same was not being practiced in operations. In fact, the
DCCBs in Bihar were not allowing farmers to withdraw entire limit at a time.
