The Hindu Business Line : `No dues' certificate: Farmers get relief

Mumbai April 25 Small and marginal farmers, share-croppers and others will not have to give a "no dues" certificate to banks for loans up to Rs 50,000.

Instead, banks will go by the certificates from the local administration on crop cultivation for loans to landless labourers, share croppers and oral lessees, says the Reserve Bank of India.

The central bank has decided to introduce a credit guarantee scheme for distressed farmers with the details expected by May 31.

Evaluation Study

State Level-Union Territory Level Bankers' Committees have reported touching 100 per cent financial inclusion in the Union Territory of Puducherry and in some districts of Haryana, Himachal Pradesh, Karnataka, Kerala and Punjab.

The RBI is to ask an external agency to study the progress in these districts "to draw lessons for further action."

A similar evaluation study of the bank-SHG (Self-Help groups) linkage programme by the RBI has been announced "to ascertain the degree of transparency in maintaining the accounts by the SHGs and their adherence to well-accepted best practices."

The total number of SHGs linked to banks was 2.58 million, with total bank credit extended to these at over Rs 14,479 crore (by February 2007). In 2006-07 (end February 2007), 3,46,000 new SHGs were tied to banks with the total bank credit taken being Rs 3,082 crore.

Credit Plans

The RBI claims a step-up in rural credit flows. In 2006-07 (end-September 2006), loans released to agriculture by public sector and private banks under the Special Agricultural Credit Plans aggregated Rs 58,887 crore and Rs 13,973 crore (provisional) respectively.

Since the introduction of Kisan Credit Card (KCC) scheme in 1988, the public sector banks have issued 25.6 million KCCs (upto December 2006) covering limits aggregating Rs 88,279 crore. In 2006-07, (up to December 2006), 3.8 million cards were issued by public sector banks covering limits totalling Rs 19,781 crore. The lag between sanctions and disbursements under the Rural Infrastructure Development Fund (RIDF) continues.

Cumulative sanctions and disbursements till February 2007 under various tranches of RIDF (I to XII) amounted to Rs 59,429 crore and Rs 35,121 crore, respectively.

Square Deal

At the same time, the number of Regional Rural Banks (RRBs) has fallen from 196 to 96 after mergers with sponsor banks. And now, RRBs have been allowed to distribute all insurance products, including health and animal insurance.

The share of moneylenders in total dues of rural households moved up from 17.5 per cent in 1991 to 29.6 per cent in 2002, according to the All India Debt and Investment Survey (59th round).

The RBI has set up a technical group "to review the efficacy of the existing legislative framework governing money lending, to examine the linkages, if any, between money lending activities and formal credit channels."

The group will submit its report by June 30, 2007. Seemingly, the poor have not yet had a square deal despite over $200 billion in reserves.

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