The Indian Banks Association (IBA) has issued advisory guidelines requesting banks to waive off all service charges, including processing, documentation, inspection, ledger folio and all other charges, for Kisan Credit Card/crop loans up to 3 lakhs.
The move will provide direct benefit to farmers and ease the pressure on them, the IBA stated.
In India, land holding pattern is dominated by small and marginal farmers (SMF) category. Roughly 85 per cent of the total operational holding in the country (about 43 per cent of the gross cropped area) are in the SMF category. There are around 216 million small and marginal farmers (or 43 million families). Providing timely and affordable credit to this resource constrained group is the key to attaining inclusive growth. Small and marginal farmers are also the most affected during times of floods, droughts, and other natural calamities.
As per parliamentary standing committee on agriculture, the losses due to climate change account for overall GDP loss of 1.5 per cent of agriculture economy. The instability in income of the farmers due to various types of risks involved in production, low bargaining power, etc, add more distress to the already affected farmers.
The Kisan Credit Card Scheme aims at providing adequate and timely credit support from the banking system under a single window with flexible and simplified procedure to the farmers to meet the short term credit requirements for cultivation of crops, investment credit requirements for agriculture and allied activities and other needs.
At present, some of the scheduled commercial banks are collecting a nominal amount of service charges towards processing, documentation, inspection, etc for agriculture loans. However, some banks are collecting service charges which are seen too high. Also, these charges are collected irrespective of whether the loan is sanctioned or not. This often acts as a deterrent for the farmers to approach the banks for loans.