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Dharwad-headquartered regional rural bank – Karnataka Vikas Grameena Bank (KVGB) – disbursed a small portion (₹7 crore) of its agricultural credit to nearly 500 farmers in a loan product during the financial year 2017-18.
This loan product has helped farmers with small and marginal land holdings to build farm ponds and to take up integrated farming activities in their backyard.
The amount may not sound big as the share of the agricultural credit of the bank was ₹7,069 crore during 2017-18. However, this model has the potential to drought-proof farmers to some extent.
S Ravindran, Chairman, KVGB, told BusinessLine that during his visit to drought-affected villages last year, he saw first-hand the plight of farmers.
He felt the need for the bank to help farmers with some new inputs, as more than 80 per cent of the farmers in Karnataka had small and marginal holdings.
The bank came out with a loan product called ‘Vikas Krishi Samruddhi’ in May last year.
The condition for getting this loan was that the beneficiary should construct a farm pond to store water. Ravindran felt that the availability of water would help them take up other activities, such as feeding cattle, growing vegetables, or taking up fisheries in the farm pond.
Regular income
Vikas Krishi Samruddhi provided a maximum loan of up to ₹2 lakh to farmers, which is repayable over five years. The intention was to provide continuous income, despite the vagaries of nature, by adopting an integrated farming system, he said. The condition to construct farm ponds under this loan product is aimed at providing protective irrigation during dry spells.
Those farmers, who constructed the farm ponds, have now established cattle-rearing and small poultry units in their backyards. They have been cultivating vegetables and have also taken up bee-keeping activities, among others.
After seeing the experience of the farmers who took this loan last year, the bank expects more farmers to take up this product this year. He said the bank is hopeful of another 2,000 farmers availing this loan this year.
Despite its small size, this model seems to be attracting other bankers now.
One official of the bank said they are getting enquiries from other banks. Nabard has also shown interest in this product, he said.
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