Agriculture - Loan Products

Kisan Credit Card (KCC): The objective of the scheme is to provide adequate and timely credit support to the farmers under single window for their short term and long term credit requirements. The short term loans covers crop loans, post harvest expenses, produce marketing loans and consumption loans. Investment credit requirements for agriculture and allied activities like pump sets, sprayers, dairy animals etc are covered under long term credit. All farmers, tenant farmers, share croppers and SHGs and Joint Liability Groups with the above categories are eligible to avail credit facilities under KCC. The short term component of KCC limit is in the nature of revolving cash credit facility and the farmer allowed to draw using cheque book, ATM/Debit Card, Mobile based transfers, Business Correspondents and Point of Sale Terminals. The credit limits under this scheme may be fixed for first year – scale of finance plus 10% of limit towards post harvest and consumption requirements plus 20% of limit for repairs/maintenance of farm assets, crop insurance etc. The limit will be fixed for successive years at first year limit plus 10% increase every year towards cost escalation. Maximum Permissible Limit will be arrived taking into crop loan needs for the 5th year plus the estimated long term loan. The validity period of the card is 5 years subject to annual review. However, branches are advised to obtain fresh letter from the borrower for every 3 years. The account need not come to Zero or Credit balance. The account is said to have been repaid if the credits are equal to original principal amount, interest and other charges during the season, within a period of one year from the date of first drawal of limit in Kharif or Rabi. The KCC holders are eligible to avail Interest Subvention/Prompt Repayment Incentive as per the guidelines in force. The collateral security norms are as under:

Credit Limit Collateral requirement
Up to Rs.100000/- No collateral
Sugar cane – Tie-up No collateral up to a limit of Rs.3 lakh to owner cultivators. However, coobligation of equal worth is required
Tobacco – Tie-up No collateral up to a limit of Rs.10 lakh subject to Rs.2 lakh per barn for maximum 5 barns
For all other loans > Rs.100000/- Collateral equivalent to 100% of loan amount

There should be no processing fee up to a card limit of Rs.3 lakh. Branches are advised to issue Rupay Kisan Card to all the KCC holders where ATMs are already been installed. Accidental insurance coverage is available up to Rs.1.50 lakh to the farmer and the premium payable is 69/- per year per head. ( Ref 19/29 dated 17.08.2013)

Kisan Chakra: Under the scheme, Vehicle loans are given to farmers for supporting transport facilities. Two-wheeler loans up to Rs.75000 and four-wheeler loans up to Rs.5 lakh can be sanctioned under this category. Loans to the children of farmers having 2 acres of wet land or 5 acres of dry land are eligible. For Two wheeler - 85% of onroad price of vehicle is sanctioned to small and marginal farmers where as 75% is sanctioned to other farmers. In case of four wheeler 75% of onroad price of vehicle is sanctioned. The loan is repayable in 5 years in monthly/bi-monthly/quarterly/halfyearly/ yearly as per option exercised by the borrower. During campaign period, the interest rate is Base Rate + 0.50% for 4 wheeler and it is Base Rate + 1% for Two Wheeler loans. However, loans repayable beyond 36 months attracts applicable Transfer Premium (TP) ( Ref 19/41 dated 05.03.2004 & Ref 19/07 dated 16.04.2013)

Gold Loans (Agriculture) - Branches are allowed to extend gold loan facility to the farmers under two types and the salient features are furnished here below:

Particulars With Interest Subvention Without Interest Subvention
Target group Agriculturist Agriculturist
Purpose Short term crop production expenses All expenses relate to agriculture and allied activities (poultry / dairy / minor irrigation etc)
Maximum loan Rs.3 lakh (including Kisan Credit Card) No Cap on loan
Documents needed Proof of Land Holding Declaration
Assessment of loan Based on scale of finance Declaration
Rate of Interest 7% or rate decided by RBI Base Rate + 1.75%
Appraising charges Up to 2 lakh loan - 1%; Above 2 lakh – 0.50%
Repayment Demand Loan - Repayment should be fixed based on the income generation coinciding with harvest and the marketing time, total period not exceeding 12 months.
Term Loan - Repayment period to be fixed 3-5 years in annual installments coinciding with the harvest and marketing season/generation of income from the activity.
Incentive for prompt repayment Available Not available

Loan eligibility will be computed at the rate per gram as decided by bank (or) 75% of market value of Gold as stated by the appraiser whichever is lower. Simple application cum letter of pledge with provision for declaration of the applicant on the purpose of the loan, Particulars of Land, survey number, extent of lands, nature of crops etc may be obtained and recorded in the application. Irrespective of the purposes, for loan amount up to Rs.1.00 lakh documentary proof need not be insisted as the farmers avail the facility for emergent purpose only. However, it is the responsibility of the branches to ensure end use. For loan amount above Rs.1.00 lakh, proof of activity/purpose may be insisted. (Cir no 228 Ref 19/31 dated 26.08.13 & cir no. 428 Ref 19/53 dated 25.01.14).

Kisan Sampathi (Produce Marketing loans) aims at preventing distress sale of the farmers’ agricultural produce. The crops that can be financed under this scheme include Paddy, Ground nut, Bengal gram, Turmeric, Maize, Millets, Yam, Black and Green gram. Bank sanctions loan amount based on the 65% of average market price or Rs.50 lakh whichever is lower. Bank entered into an agreement with NCMSL (National Collateral Management Service Ltd) for extending produce loans up to Rs.10 Lakh per farmer without collateral security provided the produce is stored at Central Ware House/State Ware House/Food Corporation of India/NCMSL approved ware Houses and branch should obtain personal guarantee of two persons. In case where produce stored with the cultivator, loan up to Rs.2 lakh can be sanctioned without collateral security, however, branch should take guarantee of two persons of sufficient worth. For loans beyond Rs.2 lakh branches should obtain collateral security with value not less than 100% of bank loan component. These loans are to be repaid within 12 months. Interest Rate for loans up to Rs.2 lakh – Base Rate and loans above Rs.2 lakh and up to Rs.10 lakh – Base Rate + 0.50% ( Ref 19/21 dated 20.06.2013)

Kisan Bandhu (Finance to Tractors): Bank entered MOUs with all leading tractor manufacturers for financing to Tractors. The borrower should have 3 acres of wet/double cropped land or 6 acres of dry/single cropped land. No collateral security is to be insisted for loans up to Rs.3.5 lakh. Finance can also be extended for second hand tractors aged up to 7 years. At present 7 companies’ viz., Eicher, Mahendra & Mahendra, Bajaj Tempo, TAFE, New Holland, HMT and International Tractors, and the dealer will offer one additional free service during the first year. Margin: For small/Marginal farmers – 15%. For others – 25%. Rate of Interest – Base Rate + 2 + Term Premia. Minimum of 1000 working hrs per year on own farm/customer land should be ensured. Under this scheme power tillers are also sanctioned to the farmers having 1 acre of wet land or 2 acres of dry land.Minimum working hours are 600. Collateral security is not required for the loans up to Rs.1 lakh.

Finance to Horticulture: National Horticulture Board (NHB) is providing 20% of unit cost as subsidy subject to maximum of Rs.25 lakhs. The activities covered under this program are Grape, Mango, Sweet orange, Lime, Banana, Amla, Pomegranate and other horticulture activities. The farmer is required to receive Letter of Intent (LOI) from the NHB and avail loan from Banks within 12 months and claim subsidy. The subsidy is to be kept as Back End subsidy. The subsidy component is 20% in case of Medicinal plantations provided by National Aromatics Board, Hyderabad.

Rythu Mitra Groups (RMG): Optimum size is 15 farmers. Marginal, Small and tenant farmers can become members of the group. Objective of RMG is to provide technology transfer, market information and credit facilities to the farmers. Quantum of eligible finance is 20 times of corpus of the group. Finance can be provided for crop production. The maximum finance is Rs.7.5 lakhs subject to scale of finance as per land holdings of each member of the group and not exceeding Rs.50000/- per member. No collateral security up to Rs.5 lakhs. Govt. of AP provides subsidy for term lending taking by RMGs who undertake Dairy, Input Dealers/fertilizers and Compost Pit/Vermi Compost activities. However, the maximum unit cost is Rs.1 lakh and the maximum subsidy available is Rs.25000/-.

Joint Liability Groups (JLG): Tenant farmers with minimum 4 – 5 people (members of existing RMGs or freshers) can form as group under JLG. The members of JLB should be from the same socio economic status living in the same village and carrying the similar activity (For example – cultivation). The acreage of the members should not be more than 2 acres in case of irrigated land and 5 acres in case of dry land. Banks can extend maximum credit facility for crop production to each member is Rs.25000/- against group guarantee of the members of the group.

Kisan Vivek – Finance to Agri Clinics/Agri Business Centers (ACABC):

Agri Clinics are envisaged to provide expert advice and services to farmers on various technologies including soil health, cropping practices, plant protection, crop insurance, post harvest technology and clinical services for animals, feed and fodder management, prices of various crops in the market etc. which would enhance productivity of crops/animals and ensure increased income to farmers.

Agri Business Centres are commercial units of agri ventures established by trained agriculture professionals. Such ventures may include maintenance and custom hiring of farm equipment, sale of inputs and other services in agriculture and allied areas, including post harvest management and market linkages for income generation and entrepreneurship development. The above schemes are open to Graduates / Diploma / Post Graduate Diploma in agriculture and allied subjects; Graduates / Post Graduation in Biological Sciences; Degree courses recognized by UGC having more than 60 percent of the course content in Agriculture and allied subjects; Diploma/Post-graduate Diploma courses with more than 60 percent of course content in Agriculture and allied subjects, after B.Sc. with Biological Sciences; Plus two (Inter) Agriculture related courses with at least 55% marks. Project cost ceilings Rs.20 lakh for individuals; Rs.25 lakh in case of extremely successful candidate and Rs.100 lakh for a group project (minimum five individuals). No margin is required for loans up to Rs.5 lakh and 10% margin is required for loans beyond Rs.5 lakh. No collateral is required for loans up to Rs.5 lakh. The repayment period will be in the range of 5 to 10 years (inclusive gestation period). The borrowers are eligible for 36% composite subsidy which will be back-ended with 3 years lock-in period. However, it is 44% for Women/SC/ST and candidates from NE and Hilly States. NABARD provides 100% refinance. ( Ref 19/15 dated 10.09.11)

Andhra Bank Rural Credit Card (ABRCC): A scheme to provide hassle free credit to customers having more than 3 years banking with branches/having sizable deposits – based on the assessment of income and cash flow of households. The limit should not exceed 20% of eligible production credit and/or 20% of annual income of the applicant from know sources or Rs.25000 whichever is less. It is overdraft/cash credit limit for 3 years with no end use stipulation and every year the account is to be brought into credit. Maximum limit is Rs.25000. Entire credit outstanding under ABRCC shall be treated as Indirect Finance to agriculture.

Kisan Samraksha (Rural Godowns): The objective of the scheme is creation of scientific storage capacity with allied facilities in rural areas to meet the requirements of the farmers for storing farm produce, processed farm produce and agricultural inputs. This scheme is meant for construction of Godowns in Rural areas only (not in municipal areas) with capacity ranging from 100 metric tons to 10,000 metric tons. The project can be undertaken by individuals, farmers, growers, Partnership / proprietary firms, SHGs, NGOs, Companies, Corporations, Cooperatives and Local Bodies. Govt. of India through Directorate of Marketing and Inspection (DMI) and NABARD administers Capital Investment Subsidy Scheme. Government of India provides 25% of unit cost as subsidy subject to maximum of Rs.2.25 crore in case of farmers & agriculture graduates and with regard to others the eligible subsidy is 15% of unit cost subject to maximum of Rs.1.35 crore. Subsidy of 33.33% in case of Women, SC, ST, SHG, Co-operative societies and projects located in North Eastern states is 33.33% of unit cost with a maximum of Rs.3.33 crore. For Godowns up to 1000 tonnes capacity – Project cost as appraised by financing Bank or actual cost or Rs.3500/- per MT of storage capacity whichever is lower. For Godowns exceeding 1000 MT capacity – Project cost as appraised by bank or actual cost or Rs.3000/- per MT of storage capacity, whichever is low. For NE region/hilly areas, normative cost will be Rs.4000/-per MT or as appraised by Bank/financial institution, whichever is lower irrespective of Godown capacity. The rate of interest for units up to 10000 MT is Base Rate + 1.25 + TP and in case of other units (> 1000 MT units), the interest rate is Base Rate + 2.50 + TP. No collateral is required up to 200 MT capacities. In case of above 200 MT capacities, collateral not required if Tie-Up with FCI/SWC/CWC is there. If there is no tie-up, 100% collateral security besides mortgage of the godown site is required if there is no tie-up. Normally, the margin stipulated is 25% of the unit cost and 10% where tie-up with FCI/CWC/SWC is available. The loan is repayable within 7 years with maximum gestation period of 2 years. NABARD reimbursing 1.50% interest rebate to the borrowers who repay the loans as per schedule based on the bank certificate (Circular no.122 Ref 19/23 dated 29.06.2013)

AB Kisan Rakshak: The objective of the scheme is to provide Bank credit to the indebted farmers to repay loans taken from non-institutional lenders i.e., private money lenders. It covers the Existing farmer borrowers of the bank, who have been regular in repaying loans with interest in the past, except on occasions when they could not do so on account of factors beyond their control and non-borrower farmers in the service area of the bank branch also. The eligible finance under this scheme for the existing crop loan borrowers is 50% of Pattabhi Agri Card sanctioned limit subject to a maximum Rs.50,000/- (or) to the extent of debt whichever is lower. The maximum limit allowed to new borrowers is Rs.25000/- (or) to the extent of debt whichever is lower. The loan amount should be released by way of Cheque/Demand Draft/Pay Order to the creditors who lent money to the farmer against the discharge of the financial instrument. The discharged instrument should be kept along with the documents. The rate of interest is Base Rate + 2.50% + TP. The loan is repayable in 7 years with a gestation period of one year. The yearly installment in Term Loan should be recovered along with Pattabhi Agri Card Loan i.e., on or before 30th June of every year or marketing the produce whichever is earlier. No collateral security is needed for the aggregate limit of Rs.100000/- and if it exceeds, branch to obtain collateral security with value equivalent to bank loan shall be offered.

New Schemes ( Ref 19/38 dated 10.12.2012)

Purchase of Land: The scheme aims at providing term loan to small/marginal farmers including share croppers/tenant cultivators to purchase agricultural land as well as fallow/wasteland to develop and cultivate it with a view to increase production/productivity. The maximum loan that can be sanctioned is Rs.10 lakhs subject to last 5 years average registration value available with registrar/Sub registrar of the area (or) cost of land as per sale agreement whichever is less + stamp duty and registration charges. Borrower has to bring 20% as margin. The security of the loan should be mortgage of land to be purchased as well as Hypothecation of existing and future crops. The interest rate should be Base Rate. The loan is repayable in 7-15 years in half yearly/yearly installments including a maximum moratorium of 24 months depending on the crops grown and income generated.

Estate Purchase Loans: To purchase estates growing traditional plantation crops viz. coffee, tea, rubber and cardamom, cashew, pepper, coconut and other perennial orchard crops. In addition to the above, purchase of existing poultry units, Fish tanks and Horticultural plantations can be considered under the scheme. The purchaser should have yielding estates and should be in a position to rejuvenate the Estate proposed to be purchased. The intending borrowers should have satisfactory past dealings with the Bank. The purchaser should be experienced in the activity; however new entrants who are financially sound and capable of bringing in margin and service the debt can also be considered. Maximum size of the estate to be financed should not exceed Ac.15.00. The quantum of loan shall be based on the lowest of (i) Market value (ii) Guidance value/Circle rate fixed by the State or (iii) purchase consideration, after retaining the necessary margin. Borrower need to bring 50% margin, however, in deserving cases it can be relaxed up to 25%. Since the estate to be purchased shall be the primary security, collateral security of minimum 100% of loan amount to be obtained. Rate of interest is as applicable to agriculture term loans. The loan should normally be repayable within 7 to 9 years. However, depending on the status of the Estate and rejuvenation period required, it may be extended up to 20 years.

Kisan All Purpose Term Loan is introduced to create a hassle free single term loan limit to Individual farmers, Group of farmers, SHGs/JLGs engaged in agriculture and allied activities for all term loan requirements like Farm Mechanization, Land Development, Minor Irrigation, Water Conservation, Horticulture etc. It shall be single transaction Term loan limit Loan repayable within 9 years. The purposes for which the limit is granted shall not be a part of the Kisan Credit Card limit and it shall be a separate Single transaction account. However development projects with a long gestation period more than 3-4 years may not be considered in view of the specific tenor of this credit product. The quantum of loan shall be subject to 5 times of Annual income of the farmer including allied activities or 50% of the value of land mortgaged whichever is lower, with a maximum of Rs.20 Lakhs. The margin required for Small/Marginal farmers is 15% and for other farmers is 25%. Rate of interest is as applicable to agriculture term loans. The loan shall be repayable within 9 years.

Kisan Tatkal – An instant credit for farming community to meet the emergency requirements for Agriculture and Domestic purposes for tiding over temporary difficulties. Individual farmers/joint borrowers (not exceeding 4 farmers) who are existing Kisan Credit Card (KCC) holders having satisfactory track record of at least two years are eligible for the loan. It shall be single transaction Term loan limit Loan repayable within 3-5 years. The minimum loan is 1000 and maximum loan Rs.50000/- subject to ceiling at 50% of KCC limit or 25% of annual income. No additional securities to be obtained. The loan shall be repayable in 3-5 years in half yearly/annual installments. Rate of interest is as applicable to Kisan Credit Cards.

Financing solar Pump set – Under this scheme loan will be granted for installation of solar water pumping system. The farmers’ land should have adequate source of water. In case any Public/Government source is being used, water right certificate from the concerned authority should be produced. In case of wells they should have sufficient recouping capacity to irrigate area proposed to be brought under irrigation. The borrower should own an economic land holding with a minimum of 10 acres. However, in case where the farmer is able to sell surplus water, relaxation may be given. The loan amount shall be 75% of the cost of the equipment. These are eligible for subsidy, which may be treated as Margin Money while disbursing the loans. Hypothecation of equipments and mortgage of land is the security. The interest rate shall be Base rate + 0.75 + TP. The loan should be repaid within 5 to 7 years by annual installments.

Solar Water Heaters/Solar Home Lighting – Small and marginal farmers Share’ croppers/tenant farmers and agri-Entrepreneurs are eligible to avail loans to purchase Solar Water heaters up to the cost of 75-85% of the unit. The interest rate shall be Base rate + 0.75 + TP and repayable in 3 to 5 years by annual instalments.

National Agricultural Insurance Scheme (NAIS): It is operated by Agriculture Insurance Company of India Limited, New Delhi. In consultation with State Level Coordination Committee of State Government, identifies notified crops district-wise and also premium rates. This scheme is operating on Village as unit for insurance coverage in specified crops like paddy and mandal-wise for other crops. Coverage of crops under crop insurance is District specific but not uniform for all districts in the state. However, Mandal is taken as unit in case of Rabi season.

Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) is introduced by Government of India with an objective to enable the Economic Weaker Sections (EWS) and Lower Income Group (LIG) segments in the urban areas to construct or purchase houses by providing an interest subsidy of 5% on loan amount of maximum Rs.1.00 lakh. EWS and LIG are defined as households having an average monthly income up to Rs.5,000 and Rs.5,001 to Rs.10,000 respectively. The borrowers under the scheme must have a plot of land for the construction or have identified a purchasable house. The preference under the scheme should be given to SC/ST/Minorities/Women/ persons with disabilities in accordance with their population in the total population of the area as per 2001 census. The scheme will provide a subsidized loan for 15-20 years for a maximum amount of Rs.1 lakh for an EWS individual for a house at least of 25 sq. mts, and Rs.1.60 lakh for a LIG individual for a house at least 40 sq.mts, will be admissible. However, subsidy will be given for loan amount up to Rs. 1 lakh only. ( Ref 28/09 dated 04.12.2010)

SLBC: The SLBC comprises of representatives of all Commercial Banks and Chairmen of Regional Rural Banks operating in the state. Representatives of the state Cooperative banks, Reserve Bank of India, NABARD shall also be invited to attend the meetings of the committee. The level of participation is the Zonal/Regional heads of banks stationed at the state headquarters, for expeditious decision-making. The activities of SLBC are – Take up issues raised by member banks or State Government authorities. Liaison with the state government authorities in the matters relating to the implementation of Lead Bank Scheme/Government sponsored schemes; Analyze the deposits and advances of banks and review the credit deployment position for improving it wherever, it is unsatisfactory; Consolidate all the District Credit Plans and prepare State Credit Plan, launch and monitor the progress of its implementation; Review the progress made under various Government sponsored programmes of poverty alleviation through Lead Dist. Managers; Maintains liaison with Government departments on behalf of Banks in the State and represent problems of the member Banks to the Govt. for solution.

Lead Bank: The main object of the scheme is a planning exercise for providing credit to develop banking in Rural and semi urban areas and extension of credit to neglected areas for balance regional development of district as a unit. Our Bank is having Lead Bank responsibilities in Six Districts in the country, of which four are in Andhra Pradesh viz. Srikakulam, East Godavari, West Godavari, Guntur and the other two districts are in Orissa (Ganjam and Gajapathi)

Service Area Approach is applicable only to implement Government sponsored schemes. Banks are free to lend to any area under other schemes subject to obtaining No Objection/No Due Certificate from the banks operating in the command area. Banks should not insist for No Objection Certificate for agricultural loans up to Rs.50000/- to existing farmers and should obtain the self declaration of not having any loan from other banks. Banks as per RBI guidelines should also not to charge any such fee for giving any no objection certificate/no due certificate to farmers.