All scheduled commercial banks must follow priority sector advance’s sub-category advances to Agriculture and Allied Activities guidelines along with priority sector advances norms to fulfill government financial inclusion policy.
Domestic scheduled commercial banks and foreign banks with 20 branches and above have to do a minimum of 18% Agriculture and Allied Activities advances as Priority Sector Advances of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher. The sub-target for Small and Marginal farmers is a minimum of 8 % included in the overall 18 % target for agriculture of Adjusted Net Bank Credit (ANBC) or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher.
Foreign banks with 20 branches and above have to accomplish the Agriculture Target set by the Reserve Bank of India within a maximum period of five years, starting from April 1, 2013, and ending on March 31, 2018, as per the action plans approved by the Reserve Bank of India. The sub-target for Small and Marginal farmers would be made relevant post the year 2018 after a review in the year 2017.
The sub-target for Small and Marginal farmers includes,
- Marginal farmers have landholding of up to 1 hectare, and Small Farmers have more than 1 hectare and up to 2 hectares.
- Landless agricultural laborers, tenant farmers, oral lessees, and sharecroppers, with a share of landholding, are prescribed for small and marginal farmers.
- Self Help Groups (SHGs) or Joint Liability Groups (JLGs) are groups of individuals of Small and Marginal farmers directly engaged in Agriculture and Allied Activities.
- Farmer’s producer companies of individual farmers and co-operatives of farmers directly engaged in Agriculture and Allied Activities, where the membership of Small and Marginal Farmers is a minimum of 75% by number and whose land-holding share is also a minimum of 75 % of the total landholding.
The advances to the agriculture sector have been mentioned as mentioned below,
Farm Credit (which will include short-term crop loans and medium/long-term credit to farmers) includes,
Advances to individual farmers [including Self Help Groups (SHGs) or Joint Liability Groups (JLGs), i.e., groups of individual farmers, provided banks maintain disaggregated data of such loans] who are directly engaged in Agriculture and Allied Activities like fishery, dairy, poultry, animal husbandry, sericulture, and beekeeping. This advance includes,
- Farm Credit (which will include short-term crop loans and medium/long-term credit to farmers) includes Crop loans to farmers that include traditional or non-traditional plantations and horticulture and loans for allied activities.
- Medium and long-term loans to farmers for agriculture and allied activities (for example, purchase of agricultural equipment and machinery, loans for irrigation and other developmental activities undertaken on the farm, and developmental loans for allied activities).
- Loans to farmers for pre and post-harvest activities, like weeding, spraying, sorting, harvesting, grading, and transporting farm products.
- Loans to farmers up to Rs.50.00 lacs against pledge or hypothecation of agricultural product (including warehouse receipts) for 12 months.
- Loans to suffering farmers owing money to lenders of non-institutional organizations.
- Loans to farmers under the Kisan Credit Card Scheme.
- Loans to small and marginal farmers to purchase land for agricultural purposes.
Advances to corporate farmers, farmers product organizations or companies of individual farmers, partnership firms, and co-operatives of farmers directly engaged in Agriculture and Allied Activities, like fishery, dairy, poultry, animal husbandry, sericulture, and beekeeping up to an aggregate limit of Rs.200.00 lacs per borrower. This advance includes,
- Crop loans to farmers, including traditional or non-traditional plantations and horticulture, and loans for allied activities.
- Medium and long-term loans to farmers for agriculture and allied activities (for example. purchase of agricultural equipment and machinery, loans for irrigation and other developmental activities undertaken on the farm, and developmental loans for allied activities).
- Loans to farmers for pre- and post-harvest activities, like weeding, spraying, sorting, harvesting, grading, and transporting farm products.
- Loans to farmers up to Rs.50.00 lacs against pledge or hypothecation of agricultural product (including warehouse receipts) for 12 months.
Agriculture infrastructure up to an aggregate sanctioned limit of Rs.100.00 crores per borrower from the banking system includes,
- Advances for constructing storage facilities (market yards, warehouses, silos, and go-downs), including cold storage units or cold storage chains, aimed to store agriculture products, irrespective of their location.
- Advances for soil conservation and watershed development.
- Advances for Plant – tissue culture and agriculture biotechnology, seed production, production of bio-pesticides, bio-fertilizer, and vermicomposting.
Ancillary activities includes,
- Loans up to Rs.500.00 lacs to farmer’s cooperative societies for disposing of member’s products.
- Loans for setting up of Agriculture clinics and Agriculture business Centres.
- Loans to Food and Agro-processing units up to an aggregate sanctioned limit of Rs.100.00 crores per borrower from the banking system.
- Advances to Custom Service Units managed by individuals, institutions, or organizations that maintain a fleet of bulldozers, tractors, threshers, well-boring equipment, combines, etc., and undertake farm work on a contract basis with farmers.
- Advances to Primary Agricultural Credit Societies (PACS), Farmers Service Societies (FSS), and Large-sized Adivasi Multi-Purpose Societies (LAMPS) for lending to agriculture.
- Advances banks give to Micro Finance Institutes (MFIs) for lending to the agriculture sector.
- Outstanding deposits under Rural Infrastructure Development Fund (RIDF) and other eligible funds with NABARD to fulfill priority sector shortfall.
