Money & Banking

Enhance repayment cycle of KCC loans, say bankers

Our Bureau Kolkata | Updated on August 24, 2019

Enhancing the repayment cycle of loans under Kisan Credit Cards (KCC) and allowing farmers to avail fresh loans even if they have not repaid the entire loan taken earlier, as long as they paid the interest, were among some of the suggestions made by bankers to relive the stress in the agriculture sector.

At the state-level bankers’ consultancy meet held in the city on Friday, bankers suggested enhancing the repayment cycle of loans under KCC from 12 months to 36 or 48 months.

The deliberations were part of the three-stage consultative process in public sector banks, based on the direction from the Department of Financial Services. The process aims to discuss nine issues, including digital banking, credit to MSME and agriculture sectors, direct transfer of benefits and education loans.

This inter-bank meet was a follow up to an intra-bank meet last week.

The suggestions from these meetings will be sent to the government, which will meet banks in the first week of September.


“Stress in the agriculture sector is touching double digits, and it’s a phenomenon visible across the banking sector. Bankers are really concerned about the issue,” Ashok Kumar Pradhan, Managing Director and Chief Executive of United Bank of India, said at a press meet after the state level bankers’ meet here today.

In fact, State Bank of India Chairman Rajnish Kumar, had recently suggested that the present model of agricultural lending in the country was not “viable” and needed an “overhaul”. He also said that the high level of non-performing assets (NPA) in farm sector was an issue.

There were also suggestions to have agriculture credit guarantee scheme, and a stronger institutional network to prevent multiple lending in the agriculture sector. The need for digitisation of land records as an important step towards bringing down instances of multiple borrowing was also highlighted at the meeting.

Other issues

Apart from agricultural loans, there was also some stress in the MSME sector and that needed to be addressed, bankers said.

They stressed on the need to have a credit guarantee mechanism for The Pradhan Mantri Mudra Yojana (PMMY), the government's flagship credit scheme for micro and small enterprises, which was the source for another big chunk of NPA for banks.

Among other suggestions, the need for cybersecurity to promote digital transactions was also discussed.

Published on August 24, 2019

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