Modern agriculture, unlike traditional cultivation, involves substantial recurring investment for using high yielding varieties of seeds, fertilisers, insecticides and advanced agricultural implements. Thus, arrangements for credit, in such a setting, should go beyond the simple provision of credit and must be linked operationally with productivity and other services.
Production and productivity, marketing and increasing the level of surplus, and savings must, 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, there must be an arrangement for assessing the requirement of funds in the supply chain 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 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 Co-operative Banks (StCBs) 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 Short Term (Others) limit consists of multiple segments viz. Agriculture and Allied Activities, Marketing of crops, Fisheries, Industrial Co-operative Societies (other than weavers), Labour Contract and Forest Labour Co-operative Societies including collection of Minor Forest Produce, rural artisans 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 Realistic Lending Programme (RLP) for respective purposes. The limit is sanctioned to StCBs and RRBs.
(iii) ST (Weavers)
Refinance support is available under ST (Weavers) for the following purposes.
- Working Capital requirement of Primary/Apex/Regional Weavers Co-op Society - through State Co-op Banks/DCCBs
- Working Capital requirement of Primary Weavers Co-op Society – through Scheduled Commercial Bank
- Working Capital requirement of State Handloom Development Corporation – through Scheduled Commercial Banks & State Co-operative Banks
- 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 -MT(conversion )
To provide relief to farmers whose crop have been damaged due to natural calamities, NABARD provides MT( conversion ) refinance to StCBs and RRBs for conversion of ST-SAO credit and rephasement/ reschedulement of existing MT(conversion) loans, when the crop loss has been 33% or more. In case of StCBs, NABARD’s share is to the extent of 60% of eligible amount, while State Govt.’s share is 15% and StCB/DCCB’s share is 25%. In case of RRBs, NABARD’s refinance is to the extent of 70% of eligible amount with sponsor bank’s share at 25% and RRB’s share at 5%.