Modern agriculture, as distinguished from traditional cultivation, involves substantial investment of recurring nature for using high yielding varieties of seeds, fertilisers, insecticides and costly agricultural implements. In such a situation, arrangements for credit should go much beyond the simple provision of credit and must be linked operationally with productivity and other services. Production and productivity, marketing and raising the level of surplus and savings must, therefore, be the major functions of credit. The benefit of modern technology, the advantages of institutional credit, infrastructural arrangements etc., should accrue to all classes of farmers. Besides, on the supply side, there must be an arrangement for assessing the requirements of funds on the basis of actual cost and raising the resources therefor. It was in this context, the crop loan system or the production oriented system of lending was evolved and conceived as the most appropriate mechanism for mass disbursement of production credit.
(i) Short Term (Seasonal Agricultural Operations)
Refinance is provided for production purposes at concessional rate of interest to State Cooperative Banks (SCBs) and Regional Rural Banks (RRBs) by way of sanction of credit limits. Each withdrawal against the sanctioned credit limit is repayable within 12 months.
(ii) Short Term (Others)
The ST (Others) limit would consist of different purposes viz. ST- Agriculture and Allied Activities, ST - Marketing of crops, ST- Fisheries Sector, ST- Industrial Cooperative Societies (other than weavers), ST- Labour Contract and Forest Labour Cooperative Societies including collection of Minor Forest produce. ST- Rural artisan including weavers members of PACS/LAMPS/FSS, ST- Purchases, Stocking and Distribution of Chemical Fertilisers and other Agricultural Inputs on the basis of bank wise RLP for respective purposes. The limit is sanctioned to SCBs and RRBs.
(iii) ST (Weavers)
Refinance support is available under ST (Weavers) as under:
1. Working Capital requirement of Primary/Apex/Regional Weavers Coop Society - through State Coop Banks/DCCBs
2. Working Capital requirement of Primary Weavers Coop Society – through Scheduled Commercial Bank
3. Working Capital requirement of State Handloom Development Corporation – through Scheduled Commercial Banks & State Cooperative Banks
4. Working Capital and Marketing requirement of Individual Weavers, Handloom Weavers Groups, Master Weavers, Mutually aided Coop Societies, Societies outside Coop fold and Producer Group Companies – through Scheduled Commercial Banks & RRBs
Medium Term Conversion.
NABARD provides medium term credit limits for conversion of short term crop loans advanced for financing SAO to StCBs and RRBs for providing relief to the farmers whose crops are damaged due to occurrence of natural calamities. The conversion of ST(SAO) loans would be available where the crop loss has been 33% or more. NABARD provides refinance to StCBs in case of conversion to the extent of 60% of eligible amount with State Govt.’s share at 15% and StCBs/DCCBs share at 25%. In case of RRBs, NABARD’s refinance is to the extent of 70% of eligible amount with sponsor banks share at 25% and RRB’s share at 5%.