SAHAKARA SINDHU
Department Of Cooperation, Government of Karnataka

Agricultural Credit     ||    Non Agricultural credit    ||    Marketing     ||     Processing     ||     Consumer     ||     Dairy     ||     Housing

AGRICULTURAL CREDIT SECTOR

SHORT TERM,MEDIUM TERM AND LONG TERM LOAN

     Economy of the State is mainly dependent on agriculture as more than 65% of the total population is engaged in this sector. Credit is an essential sinew for the progress of economic development. In a developing economy like ours Agriculture Credit assumes greater significance on account of the fact that it is a critical input to support and sustain crop production.

• The Co-operative Credit system is the oldest sector of the co-operation movement and consists of short term credit, medium term credit and long term credit structure.
  
  
• Short Term structure is a three tire structure with Primary Agricultural Credit societies in rural areas, Co-operative Central Banks at the district level and the Apex Bank at the state level.
  
  
• The Short Term credit structure provides Short Term credit for crop production and Medium Term credit for small developments through Primary Agricultural Co-operative Societies. Out of 4848 PACS in state 4500 PACS are functioning and are affiliated to 21 District Cooperative Banks (DCCB) with 596 branches. The Central Banks secure refinance facilities from NABARD through Karnataka state Co-operative Apex Bank. The average lending per farmer is Rs 22,488and average advance per PACS is Rs 58.00 lakhs.
  
  
• Karnataka state cooperative Agriculture and rural development Bank (KSCARD) at the State level and Primary cooperative agriculture and rural development bank at the taluk level numbering 177 cater to the long term credit needs in the two tier credit delivery system. The National bank for Agriculture and Rural Development (NABARD) provides refinance to the Apex bank and KASCARD Bank.

Agricultural loans to farmers at 6%:

     The State Government has implemented w.e.f. 01-04-2004 the scheme of providing Agricultural loans at the rate of 6%. The credit goes to the Government for having brought this scheme for the first time in the Country.

     The Government has accorded sanction for charging interest at the rate of 6% on S.T. M.T and L.T. loans availed by the farmers. Accordingly the Co-op. Societies/Institutions have implemented the scheme. The Government reimbursed an average of 5.5% differential interest to Co-op. Societies.Under this scheme Government has released Rs.60.00 crores and Rs. 80.00 crores during the years 2004-05 and 2005-06 respectively.

Agricultural loans to farmers at 4% :

     Government has implemented with effect from 01-04-2006 the scheme of providing Short Term, Medium Term and Long Term loans to farmers and Government will reimburse 7.5% interest subsidy on the loans issued to farmers through Credit Co-operative Societies. Under this scheme an amount of Rs 153.41 crores has been realesed by the Govt.

Interest subsidy on Agricultural Loans disbursed at 3 % :

     The scheme of advancing agricultural and allied loans to the farmers at 3 % through Cooperative credit institutions has been implemented from 01-04-2008.  The Government is providing interest subsidy at prescribed rate to the concerned institutions. An amount of Rs. 27700.00 lakhs has been earmarked to implement the scheme in the budget for 2010-11 and the entire amount released by Government has been released to 14,76,251 farmers through concerned cooperative institutions.

Agricultural loans to farmers at 1% :

     Government has implemented with effect from 01-04-2011 the scheme of providing Short Term agricultural loans to farmers up to 3.00 lakhs and Government has made budget provision of  Rs.300.00 crores. The Short term Agricultural loans which were not due on 31-03-2011 are also included in the scheme. The scheme of lending Medium and long term Agricultural loans up to Rs. 10.00 lakhs at 3 %  is continued in this year also.

       An amount of Rs. 13100.00 lakhs has been released to 100281 SC beneficiaries under the SCP programme and Rs. 1094.00 lakhs has been relased to 77035 ST beneficiaries under TSP  programme and 100 % progress achieved in utilizing the fund allotted fo SC/ST

Disbursement of Loans :

Agricultural Loans disbursement from 01-04-2010 to 31-03-2011

                                                                                                                                                                       (Rs in Lakhs)

Sl.No	Particulars	Number	Amount	Out of which Loans for New members		Out of which Loans to SC/ST members
				No	Amt	No	Amt
1	Short term loan	1439727	446889.00	161658	40134.00	171944	40567.00
2	Medium term loan	16931	23233.00	10715	18250.00	2127	1705.00
3	Long term loan	22816	17913.00	11316	9229.32	620	486.84
	Total	1479474	488035.00	183689	67613.32	174691	42758.84

The funds involved by various institutions in the Short term  agricultural loans disbursed through PACS is as follows :

Sl.No	Name of the Institution	Funds Involved (Rs. in lakhs)
1	NABARD	180000.00
2	APEX Bank	78226.00
3	DCC Banks	168386.00
4	PACS Own fund	10978.00
5	Commercial Banks	9299.00
	Total	446889.00

Graphical Representation of funds involved by various institutions in the Short term  agricultural loans disbursed through PACS :

 

Performance of Short Term, Medium Term and Long Term Credit Structure in the Karnataka

      In the 11th  five year plan, Rs.1528181.86 lakhs of  agicultural loans has been disbursed as against the target of Rs. 2165010.00 lakhs achieving 70.58 % .  There is a target of providing agricultural loans of Rs.6,00,000.00 lakhs during 2011-12.

       As on 31-3-2011, the short term(ST) , medium term(MT) and long term (LT) loans issued by the co-operative credit system in the state was Rs.446890.00 lakhs, 23233.00 lakhs and 18600.89 lakhs respectively achieving 107.65% as against the annual target.

Performance of ST, MT and LT Credit Structure in the Karnataka, from 2008-09- to 2010-11
                                                                                                                                                                                             ( Rs.in lakhs)

Year	Short term		Medium term		Long term		Total		Percentage (%)
	Target	Achievement	Target	Achievement	Target	Achievement	Target	Achievement
2008-09	342222.00	329070.00	14600.00	11440.00	21817.00	17765.00	378639.00	358273.00	94.62
2009-10	361756.00	357670.00	15893.00	16660.00	27900.00	18342.00	405549.00	392670.00	96.82
2010-11	409586.00	446890.00	20147.00	23233.00	23605.00	18600.89	453338.00	488722.89	107.81

Achievement of ST Loans in Graphical representation:

 

Achievement of MT Loans in Graphical representation:

 

Achievement of LT Loans in Graphical representation:

 

Graphical Representation of Acheivement of Percentage of ST, MT and LT loans :

Recovery Of Loans

           The comparative position  of recovery of short, medium and long term loans under the cooperative credit system in the state for the years from 2008-09 to 2010-11 is presented in the following table.

                                                                                                                                                                                                             Rs. in Crores

Year	Short term loan				Medium term loan				Long term loan
	Demand	Collection	Balance	% of Recovery	Demand	Collection	Balance	% of Recovery	Demand	Collection	Balance	% of Recovery
2008-09	2495.89	1909.40	586.49	76.50	54.70	36.07	18.63	65.95	688.19	299.34	388.85	43.50
2009-10	2818.72	2268.76	549.96	80.49	69.03	52.17	16.86	75.58	678.88	267.66	411.22	39.43
2010-11	2882.06	2551.46	330.60	88.53	87.96	74.67	13.29	84.88	726.37	381.34	345.03	52.50

Graphical Representation of Percentage of Recovery Position of ST, MT and LT loans :

 

Details of Long Term Loans advances in the last 5 years

(Rs in Crores)

Year	Target	Achievement
2006-07	300.00	250.86
2007-08	220.00	210.43
2008-09	250.00	177.64
2009-10	302.00	185.34
2010-11	250.00	193.42

 

Demand ,Collection and Balance

(Rs in Crores)

Year	Demand	Collection	Balance
2006-07	650.97	219.37	431.60
2007-08	673.34	264.75	408.59
2008-09	665.37	203.31	462.06
2009-10	752.25	231.58	517.67
2010-11	788.61	297.31	491.30

Karnataka State Co-operative Agricultural & Rural Development Bank Ltd.,

(Rs in Lakhs)

Sl.No	Particulars	2007-08	2008-09	2009-10 (unaudited)	2010-11 (Tentative)
1	Paid up Share Capital	4893.19	5003.91	4980.02	4984.07
	Of which Government	445.41	445.41	445.41	445.41
2	Reserve Funds	2003.06	2003.07	2003.07	2003.07
3	Other reserves	1990.82	2032.91	2090.34	2865.17
4	Provision for NPA	8891.86	9871.23	9608.94	8308.34
5	Fixed Deposits	1422.71	1406.77	1435.51	2482.00
6	Other Deposits	2893.04	2899.05	2965.99	2970.00
7	Borrowings Debenture & O.D.	136716.52	146644.90	152740.58	152163.29
8	Working Capital	170680.49	182363.76	179987.18	188986.54
9	Sinking Fund Investment	952.91	957.91	991.41	991.41
10	Other Investments	4446.12	4646.12	4771.12	5762.53
11	General Investment (Short Term Deposit)	25565.37	27767.17	28844.78	328223.59
12	Total Loan Outstanding	129826.21	133313.21	136611.30	136442.63
13	177 PCARD Banks Share Capital	9478.3	10701.24	11358.62	12134.08

Plan for the year 2011-2012

KISAN CREDIT CARDS

      The Kisan Credit Card Scheme introduced in the year 1997 – 1998 aims at providing timely and adequate credit support to the farmers for their cultivation needs in a flexible and cost effective manner. As on 31.3.2011 since inception out of which 19,77,714 KCC cards has been distributed and 13,42,456 farmers are covered under Personnel accident insurance scheme.

SELF HELP GROUPS

Interest subsidy to Self help groups :-

      The scheme of advancing loans to self help groups in Karnataka at 4 % has been implemented from 01-04-2007. The Government is providing interest subsidy at 9.5% to PACS and 7.50% to DCC Banks on the loans disbursed by these institutions. During the year, an amount of Rs. 41002.00 lakhs of loans has been disbursed to 34053 groups and Rs.1063.00 lakhs of interest subsidy has been released.

Graphical Representation of No of SHGs Formed :

Graphical Representation of No of SHGs to which loans have been advanced :

REVIVAL PACKAGE FOR SHORT TERM CO-OPERATIVE CREDIT STRUCTURE

In order to strengthen the short term co-operative credit structure in the State, the Govt of Karnataka has signed the Memorandum of Understanding with Govt. of India and NABARD on 25-03-2008 for implementation of the revival package formulated by the Government of India based on the recommendations of the task force headed by Prof. A. Vaidyanathan. In view of the above, the State level implementation committee (SLIC) under the chairmanship of the principal secretary to the Govt. Finance department has approved Rs.769.87 crores as the amount under this package pertaining to 4473 PACS coming under the jurisdiction of all DCCBs as on 31-3-2011.    The SLIC has sanctioned the Recapitalization assistance to the PACS as under on 31-3-2010.                                                                                                                                                                                     (Rs.in Crores) Sl.No   No of PACS Category Total Revival package Amount GOI Share GOK Share PACS Share Total 1 2009-10 First installment 1834 A 139.74 39.53 23.00 202.27 2 2010-11 Second installment 1459 B 201.62 25.97 17.84 245.43 3 Third installment 960 C 215.17 21.22 28.47 264.86 4 Ineligible PACS 220 - 45.6 5.17 6.54 57.31 Total 4473 A,B,C,D PACS 602.13 91.89 75.85 769.87         The assistance earmarked for 220 PACS which come under ineligible category is  Rs.50.77 crores (GOI Rs.45.60 crores and GOK share Rs.5.17 crores).  The decision on releasing the above said amount will be taken by SLIC. The PACS share of Rs.75.85 crores to be adjusted by the PACS after improving the resources using their own capital by adopting Business Development Plan. The GOK has made budgetary provision of Rs.91.89 crores towards Revival Package during 2010-11. For the year 2009-10, the amount of Rs.202.27 crores has been released to 1834 ‘A’ category PACS on March-2010 through respective DCCBs, towards the assistance under the package. For the year 2010-11, the amount of Rs.245.43 crores has been released towards 1459 to ‘A’ category PACS of Bidar, South canara and Udupi and the remaining all B and a few ‘C category PACS in March-2011 through respective DCCBs and the remaining portion of second instalment  amount of Rs.264.86 crores has also been released to 960 PACS of the remaining ‘C’ category in April-2011 through respective DCCBs. Among all DCC Banks, the two weak banks, viz, KCC Bank Ltd., Dharwad and Kolar DCC Bank Ltd., have got Rs.126.81 crores and  Rs.69.09 crores  respectively under the revival package. As a result of this, these two DCCBs have become currently viable and have complied with Section 11 of the Banking Regulation Act. This recapitalization assistance has been utilized effectively for the strengthening of short term credit structure by adopting the Development Action Plans (DAP) for DCCBs and Business Development Programmes (BDP) for PACS to become economically vibrant and sustainable in 3 years.