The farming community has been facing unforeseen difficulties arising out of natural calamities (Flood, drought, irregular rainfall, failure of crop due to diseases, etc.), fluctuation in price, and now, outbreak of the COVID 19 pandemic. Since agriculture, in our country, is largely dependent on rainfall, either the excess or scarcity of rainfall has been impacting the income of the farmers over the years. Recently, the distress of farmers has increased due to nationwide lockdown under Covid-19 situation. Due to the above situation, majority of our farmers continue to be economically weaker which has compelled them to borrow from sources outside the formal credit sectors in addition to the loans availed from banking sector. The farmers are therefore caught in a debt trap and are in the clutches of money lenders who normally charge exorbitant rate of interest.

In order to release the farmers from the clutches of money lenders and to bring them out of financial difficulties, a new product with features for exclusive usage for agriculture, consumption and debt redemption purposes has been introduced. This tailor-made scheme is designed to fit the immediate financial requirements of farmers in the current scenario where farming activity has become multi-dimensional and financial requirements go beyond farming (like allied activity, consumption obligations and retirement of debt with money lenders., etc.).

Sl. No Details Guidelines
1. Name of the Product Vikas Kisan Overdraft
2. Target Group Existing customers of the bank comprising of individual farmers / joint borrowers, who are owner cultivators and / or engaged in allied activities and having at least one year of dealings with our bank. The applicant / borrower should not be a defaulter to any other financial institution.
3. Purpose

The facility would be in the form of a working capital overdraft limit to enable the farmer to meet:

  • Expenses under farm sector comprising of allied activities, repairs, replacements and maintenance of farm machinery and equipment, repairs / improvements of developmental nature, replacement of draught animals, bullock carts, etc.,
  • Consumption needs and obligations.
  • Repayment of genuine private debt etc. The private debts should be for farm related investments and expenses towards the family’s urgent needs.

Activities already covered under existing KCC or any other existing agricultural loan granted to the borrower will not form part of assessment of fresh OD limit. This facility should not be granted for meeting crop cultivation expenses.

4. Loan Quantum

The following criteria is applicable for arriving at the quantum of finance:

  • Four times the gross annual income,
  • Ceiling on finance per acre of land mortgaged: Rs. 1.50 lakh per acre (for irrigated land) and Rs.1.00 lakh per acre (for non-irrigated land), subject to 50% of the available residual value of the landed property mortgaged/proposed to be mortgaged.

The overdraft facility shall however be subject to a maximum ceiling of Rs.12.50 lakhs per borrower / joint borrower. No over drawal should be allowed in the account under any circumstances.

5. Interest 10.00% per annum compounded at half yearly rests. Interest would be debited to the account on a half yearly frequency in March and September every year.
6. Margin As stipulated activity / purpose wise in Annexure II
7. Penal Interest 2.00% per annum over and above the normal rate of interest
8. Processing charges/Inspection Charges 0.5% of sanction amount with a minimum of Rs.250/-+GST
9. Assessment of Sub-limits Sub-limit for each activity segment shall be assessed based on the purpose.
10. Tenure Tenure of two years, with annual review. The limit can be renewed at the end of two years subject to satisfactory conduct of the account
11. Repayment The limit would be in the nature of revolving OD and provide for any number of withdrawals and repayments within the limit. The overdraft account shall be operated briskly and should be brought to credit at least once in a year. Interest should necessarily be serviced as required under IRAC norms governing farm related agricultural credit facilities
12. Operations Borrowers will be issued cheque books and Debit cards to facilitate easy withdrawal. Issue and operation through ATMs shall be as per the extant guidelines of the bank. Debit card should be issued for individual accounts only.