Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
Bank of India intends to provide adequate financial support and assistance to farmers by issuing the Kisan Credit Card. As per their cultivation needs and requirements, farmers can enroll under this scheme to enjoy financial benefits for agriculture and allied activities. The Kisan Credit Card scheme works out to be very cost-effective for farmers with low interest rates and flexible repayment options. Farmers have complete freedom to utilise the credit got from Bank of India as per their requirements. Bank of India sanctions higher loan amounts depending on the crop type, cultivation area and the financial requirement.
Any farmer applying for a Kisan credit card, will be given a credit card with a passbook containing details like address, name, landholding information, validity period, sub-limits, borrowing limit, etc. This is handed out to borrowers to keep track of transactions done going forward. The passbook would also contain a passport photograph of the beneficiary. When the account is being operated, the farmer is required to produce the passbook to the bank.
The bank will also check whether the climate and the soil are suitable for cultivation and if the available irrigation facilities are adequate for cultivation. When the loan is sanctioned, the bank will also investigate the storage area for produce and the quality of the produce which will be stored. Bank of India will also ensure that the expected improved income will be sufficient to repay the loan after a balance has been left behind for the applicant farmer’s household needs.
For loans given for short terms and production, the loan amount will vary depending on the cultivation area, crop that is grown and the quantum of finance. Bank of India will approve a short term working capital for small investments done for medium terms and for other supplementary activities. Short term credit will also be given for domestic requirements up to 25% of the gross income of the farmer or up to a maximum of Rs. 50,000. Financing might also be done for marketing of produce and for storage receipts up to 50% of the cost of the produce listed when the loan was sanctioned or when the produce was stored.
Loan limits can also be increased to up to Rs. 10 lakhs for every farmer up to a maximum tenure of 12 months. Farmers can also get finance sanctioned to up to the net loan amount.
When a loan is sanctioned to a farmer, Bank of India will consider the complete credit needs for production of crops and ancillary activities like electricity charges, establishments of agricultural machinery, etc., for a period of one year. Additionally, the credit limit approved will also cover the cost of non-farm and allied activities for farmers. Bank of India can also fix the credit limit on the Kisan credit card based on the cropping pattern, land holding and the quantum of finance as per the District Level Technical Committee (DLTC) or the State Level Technical Committee (SLTC). If the District Level Technical Committee (DLTC) or the State Level Technical Committee (SLTC) have not stipulated any quantum of finance, then Bank of India can determine a suitable loan quantum after getting approvals from the Zonal Office.
For fixing the limit on the Kisan credit card, the bank will also consider the operational land held inclusive of the leased-in land and without the leased-out land. Banks have the authority to fix sub-limits which fall within the approved credit limits after considering the seasonality.
As security, hypothecation of the crops grown for loan amounts up to Rs. 50,000. For loan amounts going above Rs. 50,000 the hypothecation of the standing crops and the mortgage of the land has to be provided as collateral security. If the value of the land that is mortgaged is sufficient, then no other security is required. The mortgage might be waived if any financing is done against Government warehouse receipts. For special cases, the mortgage might also be waived according to security norms. Bank of India will adhere strictly to the RBI norms as far as security is concerned.
The Pledge letter and the undertaking from godowns are applicable only if the sub limits on the storage receipts have been approved. If the limit of produce marketing increases against the stored produce by the farmer, then the CHA-1 document would be sufficient for the hypothecation of the stored produce.
The borrower will be permitted to make any number of withdrawals and make repayments within the sanctioned limit. Bank of India will perform an annual review which might help decide whether the facility has to be continued, whether the limit has to be increased or whether the withdrawal feature should be cancelled, based on the repayments done by the borrower. Credits available in the account for the 12-month tenure should be at least equivalent to the maximum outstanding amount. An amount drawn from the account should not be kept outstanding for a period more than 12 months. For banana and sugarcane crops, the period is 18 months.
If the repayment tenure has been increased owing to natural calamities, then the period of review will also get extended along with the limit. If the extension occurs for more than one crop season, then the extension granted for the total debits has to be transferred to a different term loan account and repayments have to be done as monthly installments according to the guidelines. When the review is done by Bank of India, if the farmer has a good track record then the bank also has the authority to increase the credit limit to suit the borrower’s requirements.
The interest rates charged on debit balances is as per stipulated by the Head Office on a regular basis.
The interest rates payable on credit balances will be according to savings bank rates, following savings banks rules, without holding a different account.
If finance is given for a single crop, for example, sugarcane, in association with a sugar factory and even if the farmer has taken credit for other crops from other financial institutions, the loan for the sugarcane crop can be provided if, the no-dues certificate is submitted. If crop insurance is available, the borrower has to receive adequate coverage. If there is default in payments, all special facilities under the availed scheme will be withdrawn and limit will be changed to a normal crop loan. This would include facilities like cheque book, card withdrawals, disbursement of cash up to the approved limit and further disbursements will be done only after the account has been regularised.
As a Kisan credit card is a credit facility given for agricultural purposes all prudential norms will apply to all the Kisan credit card accounts. A credit card account would become a Non-Performing Asset (NPA) if it remains inactive for one or two crop seasons when production is done after the due date of repayment. A Kisan credit card account would also be considered inactive, a) if there are no credits for two consecutive crop seasons as per the balance sheet date, b) the credits available in the account are not enough to pay the interest debited for the two crop seasons or c) if the outstanding amount is more that the two crops seasons’ limits as per the balance sheet date.
Yes, finance can be got from Bank of India for a specific crop in spite of their liabilities taken, provided the applicant submits a no- dues certificate.
The loan amount is decided for a farmer based on the crop type, area of cultivation and the quantum of finance.
The maximum tenure within which the loan has to be repaid is twelve months from the sanction date.
Yes, the loan tenure can be extended for up to one crop season, in case of natural calamities affecting the crops and their cultivation.
The validity offered on the Kisan credit card will be up to a period of five years.
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