Crop loan system Introduction
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The document discusses how crop loans are determined in India. It explains that a District Level Technical Committee (DLTC) comprised of agriculture, banking, and government experts fixes the scale of finance or maximum loan amount for farmers. The DLTC considers factors like the type of crop, variety, season, land type, and district to set the indicative cost of cultivation for different crops, upon which the loan amount is based. The committee reviews costs annually and adjusts the scale of finance accordingly.
Crop loan system Introduction
- 2. 6.The quantum of loan should be fixed according to the variety ( local, imp. variety or HYV), the season in which it is grown and the type of crop i.e. whether it is irrigated or rainfed crop. 7.Crop loan is fixed by the District Level Technical Committee (DLTC) consisting of experts from the fields of agriculture, animal husbandry, banking etc.
- 3. The twin objectives of crop loan system are: 1. Treating the crop as security instead of immovable property like land. 2. Fixing the scale of finance depending up on the actual farm expenditure i.e. based on cost of cultivation. Salient features of the crop loan system: 1.The credit requirements of the farmers are to be estimated based on the cost of cultivation of the crops cultivated by them. 2.The eligibility to receive the loan by the farmer is not measured by the ownership of land but by the fact that he is a real farmer who needs credit for cultivation. 3.The crop loans should be advanced on the hypothecation of the crop. 4.The disbursement and recovery of the loans are to be made in accordance with the crop production schedule. 5.The loans should include both cash and kind components.
- 4. Scale of Finance: ï‚ž It is an indicative cost taken as base cost depending on which the amount to be financed to a farmer is fixed. Scale of finance is fixed for annual, perennial crops and livestock also. Livestock will have fixed costs of finance and they are termed as unit costs. The unit varies with the type of livestock. Ex: for milch cattle the unit refers to two animals, for sheep and goat a minimum of 10 animals and for poultry a minimum of 500 birds.
- 5. Factors influencing the scale of finance: 1. Type of the crop: It varies from crop to crop. 2. Nature of the crop: With in the same crop between the improved varieties and high yielding varieties (HYVs) the scale of finance differs. 3. Season: Scale of finance differs with season for the same crop. 4. Type of land: Based on the type of the land i.e. irrigated or dry the scale of finance differs with the same crop. 5. District/Area: For the same crop the scale of finance varies from district to district.
- 6. ï‚ž How Scale of Finance is fixed: Scale of finance is fixed for each district by a committee known as District Level Technical Committee (DLTC). The members of DLTC constitute representatives of lead bank of that district, NABARD, local co-operative banks and commercial banks, officials of department of agriculture& animal husbandry etc. The meetings of DLTC are chaired by district magistrate/ district collector and convened by respective lead bank district manager.
- 7. ï‚ž DLTC compiles technical survey report with the information obtained from NABARD. ï‚ž NABARD in turn obtains information from the state agricultural department every year, which will have the necessary details like what are crops grown, their extent etc. ï‚ž By using the above details a potential map is prepared. By using this one can list out the priority activities to be financed in each part of the district and extent to which these are to be financed. ï‚ž Finally cost of cultivation is estimated based on the market trends & needs. The finance scale is not fixed and keeps on changing every year