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Contents
Overview Landmarks of Banking Agriculture Credit Schemes Priority Sector Lending Policy Related to Agricultural Landmarks of Insurance NAIS WBCIS AIC Contemporary Issues References

Agriculture Banking

Overview
Banking and Insurance share in GDP is 5.4% Banking sector employing approx. 1.5 million employees. 218 Scheduled Commercial Banks. 80470 branches of SCB in India, 31818 in rural. 96 RRBs working in India . Public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.
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Landmarks of Banking
Four distinct phases: 1. 1904-1969(predominance of co-operatives and setting up of RBI) 2. 1969-1975[ Nationalization of commercial banks and setting up of Regional Rural Banks (RRBs)] 3. 1975-1990 (setting up of NABARD) 4. From 1991 onwards (financial sector reforms)
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Agricultural Credit Sources

Non Institutional Institutional

Money lender Landlord Public Sector

SCB

Cooperative

RRBs

Private Sector

State

Big Businessman

Nationalized

District Primary agriculture

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SBI

Credit Flow in Agriculture

500000 450000 400000 350000 300000 250000 200000 150000 100000 50000 0 475000* 375000* 366919 301908 254658 229400 180486 125309 86981 62045 69560 Amount( ` in crores)

* Target amount

Year

*Targeted amount
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Credit Flow in 2010-11

Amount : ` In Crore

Agency

Target 2010-11 Achievement as on 30 June 2010 280000 50000 40000 66579.92 14629.93 8477.19

% Achievement 23.78 26.60 21.19

Commercial banks Cooperative banks Regional rural banks Total

375000

89687.04

23.92
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Institutional Sources for Credit Flow

1992-93
cooperative RRB commercial

2009-10
Cooperative RRBs Commercial

33%

16% 9%
62%

5%

75%

Institutional Sources of Credit Disbursement

400000 300000 ` in crore

200000

100000

0 Commercial Bank RRBs Co-operative bank

2005-06 125477 15223 30404

2006-07 166485 20435 42480

2007-08 181088 25312 48258

2008-09 228951 26765 45966

2009-10 274963 34456 57500

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Annual report 2009-10, NABARD

Percentage disbursement
100 percentage 80 60 40 20 0 65 10 25 70 72 71 78 75

8 22

9 19

10 19

9 13

2004-052005-06 2006-07

9 16 2009-10

2007-08 2008-09 year

Cooperative Banks

RRB s

Commercial Banks
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Credit to Different Sectors

Chart Title
250000 Amount ` in crore 200000 150000 100000 50000 0 2005-06 2006-07 Year Crop loan Annual report 2009-10, NABARD Term loan
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2007-08

2008-09

NABARD Credit disbursement

180000 160000 140000 120000 100000 80000 60000 40000 20000 0 2005-062006-072007-082008-092009-10 (P) Year Source : www.indiastat.com
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` in crore

Amount ` in crore

No of scheme sanctioned Total finance assistance sanctioned Disbursements

KCCs Issuance
Year Cooperative Banks 32.46% 27.03% 24.68% 15.60% 26.97% Regional Rural Banks 15.60% 16.56% 20.90% 16.41% 26.97% 14.43%
KCC

2005-06 2006-07 2007-08 2008-09 2009-10

Commercial Total Banks In million 51.94% 8.01 56.52% 54.42% 67.87% 46.06% 43.91% 8.51 8.47 8.59 5.97 90.64
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Cumulative 41.66%

Annual report 2009-10, NABARD

SHG Bank Linkage Program

Total SHGs linked with banks Total no. of SHGs credit linked during 2009-10 Total no of SHGs having loans outstanding as on 31 March2010 Estimated no of families covered upto 31 March 2010 Total saving amount of SHGs with banks as on 31 March 2010 Total amount of loans outstanding against SHGs as on 31 March 2010 Average loan amount outstanding per SHG as on March 2010
Source :Status of Microfinance in India 2009-10 NABARD

: 69.53 lakh : 15.87 lakh : 48.51 lakh : 97 million : ` 6198.71 crore : ` 28038.28 crore : ` 57795
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Loan and saving by SHGs

Savings Total amount: ` 6198.71 crore Loan Total amount: ` 14463.61 crore

2009-10
commercial bank RRBs cooperative banks 20% 21% 59%

2009-10
Commercial Bank RRBs Cooperative 9% 23% 68%

Source :Status of Microfinance in India 2009-10 NABARD

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Loan Wavier Scheme

Loans for agriculture & allied activities to be waived. Impacts 3-4 crore defaulting farmers expected to avail benefit & become eligible for fresh finance One Time Settlement (OTS) for small and marginal farmers and consider them eligible for fresh loans. Redemption of past debts from non-institutional lenders.

` 71,000 crore farm loan waiver scheme, announced during 2008-09 budget, extended till June 2010 as it expired on December 31 2009.
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Policy for Agricultural Credit

Institutional credit of ` 4.75 lakh crore for the farmers ` 10,000 crore to be contributed to NABARD s Shortterm Rural Credit fund for 2011-12. In view of enhanced target for flow of agriculture credit, capital base of NABARD to be strengthened by ` 3,000 crore in phased manner Allocation for the Rashtriya Krishi Vikas Yojana is increased to ` 7,860 crore from ` 6,755 crore in the current fiscal.
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Policy for Agricultural Credit

Direct lending for agriculture credit to small and marginal farmers. Target of providing banking facilities to all 73,000 habitations having a population of over 2,000 to be completed during 2011-2012. Short term crop loans at 7% . Interest subsidy of 3 per cent Incentive of additional one per cent interest subvention to farmers who repay short-term crop loans as per schedule, increased to 2% for 2010-11
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Priority Sector Lending

2008-09
Sector Foreign Amount ` in crore Priority Sector Advances Agriculture Exports MSE 50,254 Percentage to NBC 39.5 Private Amount ` in crore 6,10,450 Percentage to NBC 44.7 Public Amount ` in crore 1,64,068 Percentage to NBC 42.5

--28,954 15,489

--22.7 12.2

2,49,397 --1,51,137

18.3 --11.1

58,566 ---46,912

17.1 --13.7
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OLIVE Sept 2010, NIAM

Insurance

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Landmarks of Crop Insurance

LIC introduced first scheme based on individual approach in 1972 for cotton in Gujarat,
 Continued up to 1978-79 and covered 3110 farmers  premium of `4.54 lakhs and paid claims of `37.88 lakhs.

In 1979 Pilot Crop Insurance Scheme (PCIS) was introduced.

 13 States implemented till 1984-85,covering 6.27 lakh farmers  Premium of ` 196.95 lakhs and claims of ` 157.05 lakhs.

From Kharif 1985, Comprehensive Crop Insurance Scheme (CCIS) was introduced which continued till Kharif 1999.  CCIS was criticized for limited coverage of farmers, crops and risks. For covering farmer s, yield and price, Farm Income Insurance Scheme (FIIS) was also Piloted during Rabi 2003-04 and Kharif 22 2004 seasons in selected districts

CROP AND LIVESTOCK INSURANCE SCHEMES

Pilot Weather Based Crop Insurance Scheme (WBCIS) during Rabi 2009-10 season Livestock Insurance Scheme National Agricultural Insurance Scheme (NAIS) / Rashtriya Krishi Bima Yojana (RKBY) Varsha Bima / Rainfall Insurance Sookha Suraksha Kavach (SSK) (Only for Rajasthan State) Rainfall Insurance Scheme for Coffee Growers (RISC) WBCIS - Weather Based Crop Insurance Scheme Wheat Insurance (Weather & Biomass)
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CROP AND LIVESTOCK INSURANCE SCHEMES

Rabi Weather Insurance Mango Insurance Poppy Insurance USBY - Uttarakhand Seb Bima Yojana (Apple Insurance) Potato Insurance Grapes Insurance Bio-Fuel Tree/Plant Insurance Pulpwood Tree Insurance Coconut Insurance Rubber Insurance
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National Agriculture Insurance Scheme

Govt. of India and GIC introduced this scheme from Rabi 1999 2000 season Main objective is to protect the farmers against crop failure due to natural calamities. It is presently being implemented by 25 States & 2 Union Territories In last 22 Crop Season: Farmers Covered : 17.01 crore ( Av. not more than 15% farmers) Premium Collected : ` 6213.41 crore Claims Paid : ` 20437.21 crore
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Performance of NAIS
Particulars Claims (` in crore) Farmers Covered (in Lakh Farmers Benefited (in Lakh) 2007-08 1724 2008-09 3880 2009-10 4936 2010-11 (Kharif only) Under process

184

192

239

114

32

62

88

Under process

www.indiastat.com

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Weather Based Crop Insurance

Insure farmers against the probability of financial loss due to weather vagaries like rainfall, temperature and humidity. Scheme was introduced in 2007. Pilot Weather Based Crop Insurance Scheme implemented during Rabi 2009 10 season in 20 states. 20% premium for all crops , 50% for Horticultural crop. The pilot will be implemented by 27 Agriculture Insurance Company of India Ltd.

Performance of WBCIS
2007-08 2008-09 2009-10

Farmer benefitted Area insured (in ha) Percentage claim paid

www.indiastat.com

228002

229752

1134549

1068329

487336

3472629

100

100

89.27

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Major Player
Agriculture Insurance of Company India Ltd ICICI Lombard General Insurance Company Ltd United India Insurance Company Ltd Oriental Insurance Company Ltd IFFCO Tokio General Insurance Company Ltd Cholamandalam General Insurance Company Ltd 29 Shriram General Insurance Company

Agriculture Insurance Company Ltd

AIC was set up in 1st April, 2003 by the Government of India. It covers almost 20 million farmers, making it one of the biggest crop insurers in the world. AIC offers area based and weather based crop insurance programs in about 500 districts of India. Organization AIC Promoters Share Holdings Share Holding %
General Insurance Corporation of India National Bank for Agriculture And Rural Development (NABARD) National Insurance Company Limited The New India Assurance Company Limited Oriental Insurance Company Limited United India Insurance Company Limited 35.00 30.00 8.75 8.75 8.75 8.75
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AIC Product
AIC Present Products
Mango Insurance ,Poppy Insurance, Potato Insurance, Grapes Insurance Wheat Insurance, Coconut Insurance, Rubber Insurance, Rabi Weather Insurance, Pulpwood Tree Insurance, Bio Fuel Plant Insurance etc. USBY Uttarakhand Seb Bima Yojana NAIS National Agriculture Insurance Scheme WBCIS Weather Based Crop Insurance Scheme RISC Rainfall Insurance Scheme for Coffee Growers AIC Future Products Tea insurance Sugarcane Insurance Basmati Rice Insurance Contract Farming Insurance Aromatic & Medicinal plants Insurance
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Contemporary Issues
The world bank has granted $100 million loan to Maharashtra. NABARD disbursed ` 25,485 crore against the claims of ` 25,858 crore under the Agricultural Debt Waiver and Debt Relief Scheme, 2008. SCB : ` 15,681 crore SCARDB : ` 3,513 crore RRB : ` 6,291 crore NABARD grants `206 crore for rural infrastructure development in West Bengal. J &k government is planning to introduce crop insurance scheme Weather Based Crop Insurance cover from ICICI Lombard In 2009-10 ICICI Lombard insured over 29 lakh farmers and over 19 lakh acres of land.
Source : Agricultural Today and Economic Times

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References
www.ccsindia.org www.india.gov.in www.rbi.org.in www.indg.in www.indiastat.com Reports Published at NABARD Economic Times Agriculture Today Olive An Insight into Agri- Sector, NIAM RRB list
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Kisan Credit Card

KCC was introduced in 1988 for short and medium term loan Main aim was to provide timely support to farmers for their cultivation need. 90.64 million KCCs were issued till Feb, 2010 Salient Features of KCC Scheme Farmers with production credit of 5000 Rs. Or more are eligible Limit to be fixed on the basis of operational land holding, cropping pattern and scale of finance Card valid for 3 years subject to annual review Each drawl to be repaid within 12 months Security, margin, rate of interest as per RBI norms Reschedulement of loan also permissible in case of damage to crops due to natural calamities Withdrawals through slips accompanied by card and pass book
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