Agricultural Credit to Drought Prone Areas

The credit flow to agriculture during 2012-13, by the Commercial Banks, Cooperative Banks and Regional Rural Banks (RRBs) has been Rs. 4,12, 064 crore (provisional) upto January 2013. During 2011-12, the credit flow to agriculture by these institutions was Rs. 5,11, 029 crore (provisional).

The Government is not considering a loan waiver scheme for farmers in drought prone areas in the country. However, under the Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS), 2008, 3.73 crore farmers were benefitted to the extent of Rs. 52,259.86 crore.

The Government is providing Interest Subvention Scheme since 2006-07 to make short term crop loans upto Rs. 3 lakhs for a period of one year available to farmers at interest rate of 7% per annum. The Government has since 2009-10 been also providing additional interest subvention to prompt payee farmers which is at present at 3% making the effective rate of interest at 4% for prompt payee farmers.

In order to provide relief to bank borrowers in times of natural calamities, Reserve Bank of India has issued standing guidelines to banks. The relief measures, inter-alia, include conversion of the principal amount outstanding in the crop loans and agriculture term loans as well as accrued interest thereon into term loans for period ranging from 3 to 10 years depending upon the frequency of crop failures/intensity of damage to crops etc.

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