The introduction of kisan credit cards (KCCs) was a bold, futuristic step. Perhaps, this harbingered financial inclusion in rural areas. Over time, the scheme has benefitted farmers as well as banks. However, the policy makers and bankers should strive to even out the regional disparity observed by taking measures to popularize the scheme in States other than those where it is popular. With growing financial inclusion, this is bound to happen.
Dr Manas R Das
The Kisan Credit Card (KCC) scheme owes its origin to the then FM Yashwant Sinha’s Budget Speech (1998-99) following which NABARD formulated a Model Kisan Credit Card Scheme as recommended by the Committee headed by R V Gupta (an RBI Deputy Governor then) as also in consultation with major banks. RBI and NABARD instructed the commercial banks, and the cooperative banks and RRBs respectively in August 1998 to implement the scheme.
The specific benefits of the KCC scheme to farmers include: (a) simplified procedure, (b) obviating the need for applying to the bank every year, (c) freedom to purchase farm inputs like seeds and fertilizers from anywhere, (d) facility of post-harvest repayment which makes repayment easier and (e) flexibility to draw funds from any branch. Benefits to banks include less repetitive and paperwork thereby reducing cost, better recovery of farm loans, and saved time and energy facilitating expansion of other businesses.
The scheme has gained considerable acceptability by the farmers and banks alike as can be discerned from Table 1 which presents the relative data for the latest four years.
All the parameters, except those related to ‘Term Loan’, registered steady positive growth.
As per the (provisional) data published in “Pocket Book of Agricultural Statistics, 2019”, brought out by the Union Ministry of Agriculture & Farmers Welfare, at March-end 2019, the cumulative number of cards issued and amount outstanding since inception stood at 1,789.21 lakh and Rs.6,68,178.20 crore, respectively. Agency-wise, commercial banks had the highest share in the total (56.1%, 61.9%), followed in succession by cooperative banks (26.1%, 19.1%) and Regional Rural Banks (RRBs) (17.8%, 19.0%). (The first figure in the brackets denotes number of cards and the second amount outstanding)
Further, it was observed from the above-mentioned database that the distribution of the outstanding cards as well as outstanding amount among the 36 States/UTs was highly skewed. Just seven States, namely, Uttar Pradesh, Andhra Pradesh, Maharashtra, Karnataka, Madhya Pradesh, Telangana and Tamil Nadu (in that order) together accounted for 62.4% of the total outstanding cards and 53.1% of amount at March-end 2019. The remaining 29 States/UTs shared 37.6% of the outstanding cards and 46.9% of amount.
Position of Odisha
Table 2 presents the KCC details pertaining to Odisha at March-end 2019 as per the “Pocket Book.”
At March-end 2019, cumulatively, Odisha had nearly 89 lakh KCCs and amount outstanding was nearly Rs.17,000 crore. Among the six eastern States /UTs, it was the highest by cards and second highest by amount (next to Bihar). In Odisha, cooperative banks were dominant followed by commercial banks and RRBs in that order. Odisha had almost a third share in the eastern region by cards as well as amount outstanding.
The introduction of KCCs was a bold, futuristic step. Perhaps, this harbingered financial inclusion in rural areas. Over time, the scheme has benefitted farmers as well as banks. However, the policy makers and bankers should strive to even out the regional disparity observed by taking measures to popularize the scheme in States other than those where it is popular. With growing financial inclusion, this is bound to happen.
About the Author:Dr. Manas R. Das is a former senior economist of State Bank of India. He has over 30 years of experience as an economist in two large commercial banks. Academically, he is a gold medallist in Bachelor of Arts with Economics Honours from Utkal University, followed by Master’s in Economics from Delhi School of Economics and Doctorate in Economics from Gokhale Institute of Politics and Economics. He is also a Certified Associate of Indian Institute of Bankers. He has won several awards, besides being a prolific writer.