India’s Ministry of Finance is recommending that state-owned banks increase the credit limits they offer farmers under the Kisan Credit Card scheme, a ministry official tells PaymentsSource.
Rural and cooperative banks in various regions in India provide the cards based on farmers’ land holdings in order to buy agricultural supplies such as seed, fertilizer and pesticides.
Cardholders also may secure cash advances for farming-related purchases.
Farmers must repay their card loans within three years, and they may make any number of cash advances and purchases within a fixed limit based on the scale of their farm operations. Cash advances must be repaid within 12 months. The cards impose annual interest rates of less than 5%.
The advisory is “a recommendation, rather than an order,” according to the ministry official, who declines to be identified. He adds that the government’s goal is to increase general agricultural credit, and banks may assist by increasing the limits of those farmers “who make the norms.”
An official at the Mumbai-based State Bank of India says the bank has already increased farmers’ credit limits to 200,000 Rupees (US$4,400 and 3,230 Euros) from 100,000 Rupees for small- and medium-scale farmers with solid loan-repayment history.
Other banks, such as Punjab National Bank Ltd, reportedly have also increased farmers’ credit limits.
The Indian Ministry of Agriculture as of the end of February had issued 90.6 million Kisan credit cards to eligible farmers in the country, according to data the ministry previously released.
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