Kisan Credit Card buoys rural demand

Agreed that KCC was meant to meet short-term credit needs of farmers towards cultivation, consumption and some component for miscellaneous requirements. However, bankers maintain that farmers are more often than not found using a big chunk of such loans for consumption and not productive purposes as money comes cheap under the scheme. After all, commercial banks offer farm loans at 7 per cent to borrowers and also, they get interest rate subvention at 2 per cent from the government on such loans up to Rs 3 lakh. In contrast, the regular credit card issued to urban consumers by banks charge interest any where between 24 and 36 per cent.

Bankers aver that monitoring the end-use and recovery of KCC loans is difficult as there is no collateral requirement for such loans till a specific limit. Needless to say, bankers too are not aggressive on recovery from farmers as this is a politically sensitive matter.

“The whole problem is lack of supervision at the branch level. Money intended for the poor farmer is being misused in many cases. Lending to the sector is growing, but not the sector,” says N K Thingalaya, former CMD of Syndicate Bank, who is also an expert on rural banking.

The credit culture in rural India deteriorated sharply after the government announced a Rs 70,000 crore debt waiver for farmers in the February 2008 budget. “After the waiver, repayments from farmers have slowed as banks are under immense pressure from the government to increase lending to the sector which is bracketed under priority sector lending stipulated by the government,” said a banker who declined to be named.

Launched in 1998-99 by the then BJP-led NDA Finance Minister Jaswant Singh, KCC is meant to help farmers take decisions on how to use the cash for cultivation rather than banks funding suppliers, which was the case until then.

Issued to farmers based on their land holdings, KCC operates like a normal credit card. Farmers can use them for the purchase of seeds, fertilisers and pesticides, besides production needs, but in many cases, this doesn’t happen and farmers use them for raising money to take care of family weddings and medical needs.

A loan granted for short duration crops is treated as an NPA (non-performing asset) if the instalment of principal or interest remains overdue for two crop seasons. Loans granted for long-duration crops turn NPAs if the instalment of principal or interest remains overdue for one crop season. It is not unusual at some banks that a new loan cycle begins even before the existing loans are repaid fully, bankers said.

There is evidence of rampant ever-greening of loans drawn through KCCs in terms of loan amount and number of cards issued, analysts said, going by the growth of such exposure since 2010. Ever-greening refers to the practice of giving fresh loans to a borrower to help him meet interest payments. “Outstanding KCC loans have grown at around 33 per cent in the past two years, while the number of credit cards has grown at around 13 per cent,” said V S Karthik, an analyst at Espirito Santo Securities India, which shows farmers are taking fresh loans to repay old loans.

Launched in 1998-99 by the then BJP-led NDA Finance Minister Jaswant Singh, KCC is meant to help farmers take decisions on how to use the cash for cultivation rather than banks funding suppliers, which was the case until then.

Issued to farmers based on their land holdings, KCC operates like a normal credit card. Farmers can use them for the purchase of seeds, fertilisers and pesticides, besides production needs, but in many cases, this doesn’t happen and farmers use them for raising money to take care of family weddings and plastic card.

A loan granted for short duration crops is treated as an NPA (non-performing asset) if the instalment of principal or interest remains overdue for two crop seasons. Loans granted for long-duration crops turn NPAs if the instalment of principal or interest remains overdue for one crop season. It is not unusual at some banks that a new loan cycle begins even before the existing loans are repaid fully, bankers said.

There is evidence of rampant ever-greening of loans drawn through KCCs in terms of loan amount and number of cards issued, analysts said, going by the growth of such exposure since 2010. Ever-greening refers to the practice of giving fresh loans to a borrower to help him meet interest payments. “Outstanding KCC loans have grown at around 33 per cent in the past two years, while the number of credit cards has grown at around 13 per cent,” said V S Karthik, an analyst at Espirito Santo Securities India, which shows farmers are taking fresh loans to repay old loans.

Launched in 1998-99 by the then BJP-led NDA Finance Minister Jaswant Singh, KCC is meant to help farmers take decisions on how to use the cash for cultivation rather than banks funding suppliers, which was the case until then.

Issued to farmers based on their land holdings, KCC operates like a normal credit card. Farmers can use them for the purchase of seeds, fertilisers and pesticides, besides production needs, but in many cases, this doesn’t happen and farmers use them for raising money to take care of family weddings and medical needs.

A loan granted for short duration crops is treated as an NPA (non-performing asset) if the instalment of principal or interest remains overdue for two crop seasons. Loans granted for long-duration crops turn NPAs if the instalment of principal or interest remains overdue for one crop season. It is not unusual at some banks that a new loan cycle begins even before the existing loans are repaid fully, bankers said.

There is evidence of rampant ever-greening of loans drawn through KCCs in terms of loan amount and number of cards issued, analysts said, going by the growth of such exposure since 2010. Ever-greening refers to the practice of giving fresh loans to a borrower to help him meet interest payments. “Outstanding KCC loans have grown at around 33 per cent in the past two years, while the number of credit cards has grown at around 13 per cent,” said V S Karthik, an analyst at Espirito Santo Securities India, which shows farmers are taking fresh loans to repay old loans.

The Orioles managed to win 5-4 in 10 innings despite going 0-for-10 with runners in scoring position before Steve Pearce’s game-winning hit. The Orioles are 1-for-17 with runners in scoring position over their last two games.

Give Orioles manager Buck Showalter credit for having faith in Steve Pearce with Chris Davis out. Pearce came through with three hits, including the game winner. One of the best compliments Showalter can give one of his players is saying he’s “easy to trust” and Showalter often says that about Pearce even through some early-season struggles.

Saturday’s win was a truly a team effort. Tommy Hunter picked up Darren O’Day, who had a rare off day. Backup catcher Chris Snyder had a humongous throw out of Mark Trumbo in the ninth and Pearce played a solid first base. Nolan Reimold is continuing to show signs of getting things together at the plate.

The news on Chris Davis seems to be promising for the Orioles. The initial look at Saturday's MRI shows patellar tendinosis, which is basically inflammation of the patellar tendon in the knee. So everything is sound structurally.

Davis had a great quote after the game. Asked about seeing Pearce step up for him at first on Saturday, he made his contributions -- eating lots of sunflower seeds -- known in his typical deadpan fashion.