RBI has placed a new report for public comments. This one is on further simplifying the procedures and processes for agricultural loans, especially for small and marginal farmers.
The press release states:
It may be recalled that the Reserve Bank of India had constituted a working Group under the Chairmanship of Shri C.P. Swarnkar, Chairman and Managing Director, Syndicate Bank to suggest measures to further simplify the procedures and processes, thereby reducing the cost and time for obtaining agricultural loan, especially by small and marginal farmers. The Report of the Working Group was submitted in April 2007 and Reserve Bank has already implemented the following recommendations of the Group in the Annual Policy for 2007-08 :
- The banks were advised to immediately dispense with the requirement of ‘no due’ certificate for small loans up to Rs.50,000 to small and marginal farmers, share-croppers and the like and, instead, obtain self-declaration from the borrower.
- Further, banks were advised to accept certificates provided by local administration/panchayati raj institutions regarding the cultivation of crops in case of loans to landless labourers, share-croppers and oral lessees. This would help overcome the problem faced by the banks in lending to landless labourers, share-croppers and oral lessees due to the absence of documents verifying their identity and status.
- Recognising role of financial/credit counselling towards enhancing the quantity and quality of agricultural credit, each State Level Bankers Committee convenor has been asked to set up a credit-counselling centre in one district as a pilot and extend it to all other districts in due course.
On a quick glance over the report, the findings are largely what one would expect. The farmers have to spend a lot of effort in getting a loan application done and numerous hassles are involved.
The suggestions are many. However, this para explains all the thinking:
The Group is of the view that while a lot of effort has already been made to simplify the procedures and processes of agricultural lending, the real benefit of simplification will accrue to the farmers if there is a substantial change in the lending methods and attitudinal change at ground level.
So enough preaching has been done. Time to practice.