(a) whether agriculture being a priority sector, the rate of interest for agricultural
loans are higher as compared to interest rate of other sectors of economy; and
(b) if so, the steps being taken to reduce the rate of interest in agriculture sector
to reasonable and affordable level and also to simplify the procedure of lending to the
farmer to make agriculture credit easily available?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE AND COMPANY AFFAIRS
(SHRI ANANDRAO VITHOBA ADSUL):
(a) and (b) Currently the lending rates have been deregulated and the banks are free to
set their Prime Lending Rates (PLR), which would be minimum rate charged by banks for
credit limits over Rs. 2 lakhs. Effective from April 29, 1998, it has been stipulated that
the lending rates for credit limits of Rs. 2 lacs and below should not exceed the PLR.
A substantial portion of the agriculture credit accounts will be covered under credit
limits up to Rs. 2 lacs. RBI has taken several steps to simplify the procedure for lending
to agricuiture in pursuance to the recommendations made by High Level (R.V. Gupta)
Committee on agricultural credit through commercial banks. Banks were advised to implement
its recommendations regarding simplification of procedures/forms in respect of applications,
agreements, etc. rationalization of internal returns of banks, delegation of more powers
to branch managers, introduction of composite cash credit limit to agriculturists,
introduction of new loan products with savings components, cash disbursement of loans
dispensation of `No Dues Certificate` discretion to banks on matters relating to
margin/security requirements for agricultural loans above Rs. 10,000/- etc. These measures
are expected to facilitate easy access to credit by farmers from banks, quicken the pace
of flow of credit to agricuiture sector. In addition RBI has also advised banks to take
several steps like formulating Special Agricultural Credit Plans (SACPs) by public
sector banks, opening of Specialised Agricultural Finance Branches, introduction of Kisan
Credit Cards (KCCs) and issue of KCCs against specific targets issued every year,
assistance to States under Rural Infrastructure Development Fund (RIDF) maintained with
National Bank for Agriculture and Rural Development (NABARD), introduction of microcredit
delivery system etc.