{"id":33829,"date":"2024-12-17T19:26:26","date_gmt":"2024-12-17T13:56:26","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=33829"},"modified":"2024-12-17T19:26:28","modified_gmt":"2024-12-17T13:56:28","slug":"rbi-increases-collateral-free-agricultural-loan-limit","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/17-12-2024\/rbi-increases-collateral-free-agricultural-loan-limit","title":{"rendered":"RBI Increases Collateral-Free Agricultural Loan Limit"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy; Agriculture<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In a significant move to bolster the agricultural sector, the Reserve Bank of India (RBI) has announced an increase in the <strong>collateral-free agricultural loan limit from \u20b91.6 lakh to \u20b92 lakh per borrower<\/strong>, effective from <strong>January 1, 2025.<\/strong>\n<ul class=\"wp-block-list\">\n<li>Banks are instructed to implement the revised guidelines expeditiously and provide widespread publicity to ensure maximum outreach.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Agricultural Credit to Farmers<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>According to the Economic Survey 2023-24, Agricultural credit in India was<strong> 1.5 times increased<\/strong> from Rs 13.3 lakh crore in FY21 to Rs 20.7 lakh crore in FY24.<\/li>\n\n\n\n<li>It provides farmers with the necessary financial resources to invest in their farms, improve productivity, and ensure food security.\u00a0<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Importance of Agricultural Credit<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Enhancing Productivity:<\/strong> Access to credit allows farmers to purchase high-quality seeds, fertilizers, and modern equipment, leading to increased agricultural productivity.\n<ul class=\"wp-block-list\">\n<li>It is particularly beneficial for small and marginal farmers, who constitute over 86% of the agricultural sector.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Risk Management:<\/strong> Credit facilities help farmers manage risks associated with crop failures, natural disasters, and market fluctuations.<\/li>\n\n\n\n<li><strong>Sustainable Farming:<\/strong> Financial support enables farmers to adopt sustainable farming practices and invest in long-term agricultural projects.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Institutional Framework\/Initiatives for Credit Flow to Agriculture Sector<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>National Bank for Agriculture and Rural Development (NABARD):<\/strong> Established in 1982, NABARD is the apex development bank responsible for promoting and regulating credit and other facilities for agriculture and rural development.\n<ul class=\"wp-block-list\">\n<li>It provides refinance support to rural financial institutions and implements various development programs.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Primary Agricultural Credit Societies (PACS):<\/strong> These are grassroots-level cooperative institutions that provide short-term and medium-term credit to farmers.\n<ul class=\"wp-block-list\">\n<li>PACS are crucial in ensuring that credit reaches small and marginal farmers.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Kisan Credit Card (KCC): <\/strong>It aims to provide farmers with timely access to credit for their cultivation needs.\n<ul class=\"wp-block-list\">\n<li>It covers expenses related to crop production, post-harvest activities, and maintenance of farm assets.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Pradhan Mantri Fasal Bima Yojana (PMFBY):<\/strong> It helps farmers mitigate the risks associated with crop failure due to natural calamities.\n<ul class=\"wp-block-list\">\n<li>It ensures that farmers can repay their loans even in adverse conditions.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Interest Subvention Scheme:<\/strong> It provides short-term crop loans at subsidized interest rates.\n<ul class=\"wp-block-list\">\n<li>Farmers can avail loans up to \u20b93 lakh at an interest rate of 7%, with an additional 3% subvention for timely repayment.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Challenges and Solutions<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Access to Credit:<\/strong> Small and marginal farmers often face difficulties in accessing institutional credit due to lack of collateral and complex loan procedures.\n<ul class=\"wp-block-list\">\n<li>Simplifying the loan application process and enhancing financial literacy can help address this issue.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>High Indebtedness<\/strong>: Many farmers rely on non-institutional sources of credit, such as moneylenders, which charge exorbitant interest rates.\n<ul class=\"wp-block-list\">\n<li>Strengthening the reach of institutional credit and promoting financial inclusion are essential to reduce farmers\u2019 dependence on informal lenders.<\/li>\n\n\n\n<li>Enhancing financial literacy among farmers to make them aware of the available credit facilities.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Climate Risks: <\/strong>Agriculture in India is highly vulnerable to climate change and extreme weather events.\n<ul class=\"wp-block-list\">\n<li>Expanding the coverage of crop insurance schemes and promoting climate-resilient farming practices can help mitigate these risks.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p><a href=\"https:\/\/pib.gov.in\/PressReleaseIframePage.aspx?PRID=2084395\" target=\"_blank\" rel=\"noopener\">Source: PIB<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In a significant move to bolster the agricultural sector, the Reserve Bank of India (RBI) has announced an increase in the collateral-free agricultural loan limit from \u20b91.6 lakh to \u20b92 lakh per borrower, effective from January 1, 2025.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-33829","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/33829","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=33829"}],"version-history":[{"count":1,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/33829\/revisions"}],"predecessor-version":[{"id":33830,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/33829\/revisions\/33830"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=33829"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=33829"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=33829"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}