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 CROP FINANCE
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05. OBJECTIVE AND PURPOSE:
a) The objective of the scheme is to meet genuine short term crop production credit requirements of farmers to enable them to undertake crop cultivation on modern lines so that they can increase their farm production and productivity level.
b) Finance can be considered for the following purposes:
i) Purchase of hybrid / improved seeds, fertilisers, manures, insecticides, pesticides, weedicides, etc.
ii) Hire charges of tractor and other farm machinery / implements, wages of hired labour, irrigation charges / cost of fuel or power for running pumpsets, etc.
iii) Advance for storing the harvested produce for sale.
c) Advance for cultivation of commercial crops including horticulture and plantation crops.
d) Farmers can also be financed for multiplication of hybrid / high yielding varieties of seeds.
06. ELIGIBILITY:
a) Individual farmers, registered partnership firms, companies, registered farming co-operative societies who own / possess agricultural land as owner, registered tenants or sharecroppers with recorded rights are eligible for finance.
b) They should be progressive and willing to adopt modern cultivation practices.
c) Farmers who are members of co-operative societies ceded to us, may be financed for crop production through such societies.
d) In case of seed multiplication programmes, the proponent farmer should be an owner cultivator with good land and assured irrigation facilities. He should be well experienced in seed production techniques. His experience and performance may be verified from the agency which supplies him the foundation seed and purchase the commercial seed from him.
07. QUANTUM OF FINANCE:
a) Quantum of finance to a farmer is determined based on –
i) Cropping pattern,
ii) Extent of cultivation of each crop and
iii) Scale of finance fixed for the crops.
b) Scale of finance is the finance required for raising a crop per unit cultivated area, i.e., acre or hectare. The scale of finance for different crops in a district is decided every year by District Level Technical Committee.
c) The District Central Co-operative Bank in the district acts as the convenor of this committee and all major Banks in the district, State Agriculture Department officials, leading farmers, the Lead district Manager, etc. act as its members.
d) This committee, which is a sub-committee of the District Consultative Committee, meets once in a year and fixes the scale of finance for each crop raised in the district.
e) As per RBI guidelines, each Bank Branch is required to display the scale of finance in Branch premises.
08. MARGIN:
a) For loans upto Rs.50,000/= : Nil
b) For loans over Rs.50,000/= : 15 to 25%
Note:
Margin in case of crop loans need not be in cash. The cost of labour of the farmer and his family and the cost of other inputs not financed by the Bank can constitute margin.
09. SECURITY:
a) Upto Rs.50,000/= : D. P. Note
Hypothecation of standing crops
b) Above Rs.50,000/= : D. P. Note
Hypothecation of standing crops
Mortgage of land / Collateral security
Note:
i) In case the value of land mortgaged is adequate, no other security should be obtained.
ii) For finance against Government warehouse receipts, mortgage may be waived.
iii) Waiver of mortgage of land in deserving cases may be considered as per security norms.
iv) The RBI norms on security should be strictly adhered to.
10. TECHNICAL FEASIBILITY:
a) The soil and climate should be suitable for the crops proposed to be grown.
b) Adequate irrigation facilities should exist wherever necessary.
c) Requisite inputs such as seeds, fertilisers, etc. should be easily available.
d) Storage, processing, transportation and marketing facilities should be available according to the requirements of the crops.
e) The cropping pattern should aim at maximising the utilisation of land area within the limited water resources available.
f) The yield levels anticipated should be realistic considering the local factors.
g) Besides the above, in case of seed multiplication finance -
i) Care has to be taken to see that the foundation seed supplied to the farmers is of pure variety with very good yield potential.
ii) There should be a written contract between the proponent and the agency regarding the supply of foundation seed, technical guidance and supervision.
iii) The agency supplying the foundation seed should be well established and reputed with capacity to market the commercial seed from the proponent at a fixed price.
iv) The foundation seed is supplied to eligible farmers by the National Seeds Corporation, State Seed Corporation, agricultural universities and private seed firms / agencies.
v) Seed production being a highly technical job, supervision and guidance to the farmer at every stage of crop growth is very essential and the supplying agency should be able to provide this.
vi) Crop insurance, wherever available should be obtained for such scheme.
h) All the above aspects should be studied during the pre-sanction inspection.
11. ECONOMIC VIABILITY:
The anticipated incremental income should be adequate to repay the advance leaving sufficient balance for farmer’s domestic needs.
12. REPAYMENT PERIOD:
The entire advance should be repaid in one lumpsum within three months from harvesting of crop or one month from marketing of produce, whichever is earlier.
13. CROP INSURANCE:
a) Crops financed should be insured under the Rashtriya Krishi Bima Yojana (RKBY) of the Agriculture Insurance Company of India Ltd. (AIC).
b) Insurance premium should be debited to the relative loan account and claims if any be credited to the beneficiary’s account promptly.
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