Govt Boosts Farm Credit Access For Small & Marginal Farmers: Finance MoS

New Delhi, Mar 10 (KNN) The government has taken several measures to increase institutional credit flow to the agriculture sector, particularly to underserved segments, Minister of State for Finance Pankaj Chaudhary informed the Rajya Sabha on Tuesday.

The minister said the government sets annual Ground Level Credit (GLC) targets for agriculture and allied sectors, which banks are required to meet. 

The targets are fixed region-wise, agency-wise and loan-category-wise, covering scheduled commercial banks, regional rural banks and cooperative banks. 

Priority Sector Lending and Credit Targets

Under the Reserve Bank of India’s Priority Sector Lending (PSL) guidelines, banks must allocate at least 18 per cent of their Adjusted Net Bank Credit to agriculture, with a 10 per cent sub-target for small and marginal farmers. 

The framework also includes incentives for districts with lower credit flow and disincentives for those with comparatively higher priority sector lending.

Support Through Kisan Credit Card

The Kisan Credit Card (KCC) scheme provides farmers with timely credit for purchasing inputs such as seeds, fertilisers and pesticides, and for meeting working capital needs. 

Under the Modified Interest Subvention Scheme (MISS), farmers can avail short-term agricultural loans at 7 per cent interest through KCC, with an additional 3 per cent incentive for prompt repayment, effectively reducing the rate to 4 per cent.

Higher Collateral-Free Loan Limit

The RBI has also increased the collateral-free limit for short-term agricultural loans from Rs 1.6 lakh to Rs 2 lakh per borrower from January 1, 2025, improving credit access for small and marginal farmers, who account for over 86 per cent of the sector.

Infrastructure and Credit Planning

The government, through National Bank for Agriculture and Rural Development (NABARD), supports rural infrastructure development through the Rural Infrastructure Development Fund, which helps enhance credit absorption capacity in rural areas.

NABARD also prepares district-level Potential Linked Credit Plans (PLPs) under the RBI’s Lead Bank Scheme to estimate priority sector credit potential and guide credit targets for agriculture across states.

(KNN Bureau)