The International journal of analytical and experimental modal analysis ISSN NO: 0886-9367
Organized Finance Institutions for Agriculture in Tamil Nadu – A Theoretical study
Author: 1:
Mr. B. Arunkumar, M.Com., M.B.A., M.Phil., S.E.T., Research Scholar, PG & Research Department of Commerce, Bharathidasan University Affiliated – Government Arts College [Autonomous], Karur-5. E – Mail: [email protected] Mobile: 99940 79317
Author: 2:
Dr. V. Padmanabhan, M.Com., M.B.A., M.M.M., M.Phil., PGDCA., Ph.D., Assistant Professor and Research Supervisor, PG & Research Department of Commerce, Bharathidasan University Affiliated – Government Arts College [Autonomous], Karur-5. E – Mail: [email protected] Mobile: 93641 54276
Abstract
Various sector providing finance facilities to farmers in different ways. The sector may be
classified into organized and unorganized sector. This study classifies organized finance
institution for farmers and express its few facilities provided to them in Tamil Nadu. In recent
days farmers are diversifying their agriculture business due to several reasons. To avoid quit of
agriculture by farmers, financial institutions facilitate finance to farmers.
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The study highlights the facilities of finance institutions to farmers in Tamil Nadu and its
several schemes to farmers.
Key words: Organized finance institution, Farmers, Tamil Nadu.
Organized Finance Institutions for Agriculture in Tamil Nadu – A Theoretical study
Introduction
Various sector providing finance facilities to farmers in different ways. The sector may be
classified into organized and unorganized sector. Indigenous bankers, pawn brokers, chettiars,
etc are unorganized sectors lending their money to farmers with high rate of interest which
makes difficulty to farmers in repayment. Organized sectors are sector which lend to farmers in
reasonable rate of interest which facilitates them to sustain in farming business. In recent days
farmers are diversifying their agriculture business due to several reasons. To avoid quit of
agriculture by farmers, financial institutions facilitate finance to farmers.
Organized Finance Institutions for Farmers:
Under this study, organized financial institution is an institution of formal structured
banks and they are basic facilitators to farmers in connection with source of finance. Major
known activities of banks are accepting deposits and lending of loans. Farmers attain benefits
through banks in different manners such as: crop loans, tractor loans, jewel loans etc. In this
study banks of farmers’ facilitators are studied with following heads which portrays as
following: Public sector banks, Private banks, Insurance agency and KVK.
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Public Sector Bank
In accordance with benefits received by farmers public sector banks are classified as
commercial bank, agricultural bank, and co-operative banks. Agricultural bank is further sub
divided as: National Bank for Agriculture and Rural Development (NABARD), Regional Rural
Bank (RRB) and Land Development Banks. NABARD also falls under land development banks.
Land development bank is categorized into two types based on its jurisdiction. One is
functioning at state level and another is at district level. In state level LIC and NABARD are
important source of finance facilitators to farmers.
Co-operative banks are also called as National Co-operative Development Corporation
(NCDC). It has two type of structure. One is formal structured co-operative bank and another is
informal structured co-operative bank. Formal structured co-operative bank is functioning at
village, district and state level. Another is informal structured co-operative which functions at
urban level and also called as primary co-operative bank.
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Figure: 1 – Organized Finance Institution to farmers:
Organized Finance Institution for farmers
Public Private Sector Sector Banks Banks
Commercial Bank Agricultural Bank Co-operative Bank
Formal Informal
NABARD RRB Land Development Banks
Primary Level State Level
Commercial Bank:
Commercial Banks have their own schemes for sanctioning loans to farmers who are in
need of agriculture credit. However these banks charging interest for their lending related to
agriculture loan. Government stipulates only 4% interest rate for agriculture loan, but
commercial banks are not obeying. Farmers are forced to pay higher interest by commercial bank
for the credit relates to agriculture. The interest subvention scheme, introduced by the union
government in 2006-07 for short term loans upto Rs. 3 lakh. Under this scheme the rate of
interest charge to farmers is upto 4%, if they pay their loan in time they also can get loan at 3%
interest rate again.
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Now there is no any follow up of this scheme by bank because of no any announcement by union
government in the academic year 2015-16. So commercial banks are now collecting interest upto
11% for agriculture loan since April 2015.
Agricultural Bank
Agricultural bank gives agriculture credit to farmers in order to develop the farmers. It
categorized as: NABARD, RRB, and Land Development Banks. The role of agricultural bank in
Tamil Nadu is explained in below headings:
NABARD Role in Tamil Nadu
The National Bank for Agriculture and Rural Development is providing funds to Tamil Nadu
Government under the funding scheme like Research and Development Fund (R&D F), Farm
Innovation and Promotion Fund (FIPF) and Rural Innovation Fund (RIF). It also provides fund
to Self Help Groups (SHGs), NGOs, individuals, non-profit organizations and universities under
several schemes. Nearly 145 crores were funding by NABARD under the above said schemes.
In 2011-2012, NABARD has released a comprehensive list of more than 50 schemes that it
currently operates for Microfinance, Financial inclusion, Village Development, Credit Support,
Institution Development, Rural Infrastructure Development and Production Credit Support.
NABARD 50 schemes were classified in 9 different catagories:
1. Micro finance 2. Financial Inclusion 3. Non Farm Sector 4. Promotional Funds 5. Production Credit Support 6. Rural Infrastructure Development
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7. Villiage Development Programme (VDP) 8. Institution Development (Cooperative Instn.) 9. Investment Credit Support
RRB in Tamil Nadu
Regional Rural Bank functioning in 14 districts of Tamil Nadu viz., Salem, Namakkal,
Krishnagiri, Dharmapuri, Villupuram, Cuddalore, Coimbatore, Karur, Erode, Nilgiris, Vellore,
Tiruvannamalai, Kancheepuram and Tiruvallur. Headquarters of RRB is Salem. Indian Bank has
sponsored 2 RRB viz., Saptagiri Grameena Bank and Pallavan Grama Bank.
For the motivation of farmers and investment hike in agriculture NABARD had sanctioned
5000 crore rural credit in 2014-15 aimed at increasing long term credit in agriculture. Under this
scheme, NABARD will be refinancing agricultural term loans extended by the cooperative banks
and Regions Rural Banks (RRB) to agriculturists. Refinance facility to RRB by NABARD with
the repayment period of 5 years at the interest rate of 7.85%. It will be helpful to RRB in lending
at lower rate of interest to farmers who in need of agriculture credit.
Land Development Bank in Tamil Nadu
Land development bank is also known as 2-Tier land development bank and is classified
as follows: Primary Land Development Bank (PLDB) and State Land Development Bank.
Primary Land Development Bank (PLDB)
PLDB functions at the District Level and it has branches in Taluka level. All the land
owners are eligible to become members in this bank and can get loan by mortgaging their land.
Interest rate is 11 to 12% under this scheme. In 2015, Totally 28 Districts of Tamil Nadu are
benefiting under this scheme with 531 numbers of villages.
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State/Central Land Development Bank (CLDB)
The members in this CLDB are some members in PLDB. It grants long term loans to
agriculturist through PLDB. It receives the fund by issuing the debentures to NABARD,
reimbursement of subsidies from Government and LIC.
Tamil Nadu and Co-Operative bank or National Co- operative Development Corporation
(NCDC)
Co-operative bank plays vital role in the growth of agriculture and rural peoples of India.
This bank is structured into two types. One is formal structure and another is informal structure.
Formal structure:
Formal structure co-operative banks are: primary agriculture credit co-operative society,
central co-operative society and state co-operative society.
Primary Agricultural Credit Co Operative Society
There are 4474 Primary Agricultural Credit Co Operative Society in Tamil Nadu. They
provide short term and medium term loans to aspiring farmers. Short term loan are repayable
within a period of 12 to 15 months and Medium term loan are payable within 3 to 5 years.
Interest rate of 4% over these loans are chargeable by PACCS from 2008-09.
PACCS helps in getting crop insurance, encourage Joint Liability Groups involve in
agriculture for their additional assistance, procure the paddy by minimum support price and it
also assist the Tamil Nadu Co operative Agricultural Co operative Marketing Federation of India
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(NAFED) to procure the agriculture products. PACCS provides pledge loan for preventing
distress sale by the farmers during the peak harvest.
Central Co operative Society in Tamil Nadu
There are 18 co-operative bank is 1992 march, 31. In 2000, 2 more banks were started. In
India having 13,030 branches out of which 731 branches were in Tamil Nadu. In Tamil Nadu
they provides different types of term loans as said below: Cash Credit Loans, Crop Loans, Jewel
Loans and Overdue on Term Loans
Cash Credit Loans
Cash Credit Loans is a financial credit sanctioned to co operative society upto which it can
draw any time. This scheme is for non agricultural business purposes. The maximum limit in
cash credit loan scheme is Rs. 50,000. Repayment period under this scheme is 5 years with the
rate of interest is 15%.
Crop Loans
Short and Medium term loan are given upto 12 months (Short term) for financial seasonal
agricultural operations and 1 to 3 years (Medium term) for purchase of well and improvement of
loan.
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Jewel loans
Under this scheme is the jewel loan is issued to farmers through the Primary and Central Co
operative banks.
Overdue on Term Loans
Overdue on Term Loans is a term loan which explain the over dues used in explain the
non-payment of loans.
State Co operative/Apex Co operative Bank/ TNSC Bank in Tamil Nadu
Tamil Nadu State Co Operative Bank (TNSC Bank) is apex co operative bank ltd. was
registered under co operative act, 1905. It entered into 103 rd year of useful service to farmers
and weavers of Tamil Nadu. The bank was included in the II nd schedule of RBI in July 1966
and licenced in Aug., 1972.
State Co operative bank provides short and medium term loans to farmers under 2 different
schemes as follows:
Agriculture Advances
a. Short term agricultural advances
b. Comprehensive Crop Insurance Scheme (Khariff)/National Agricultural Insurance
Shceme (NAIS)
c. Kisan Credit Card (KCC) Scheme
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Short term agricultural advances scheme is providing to farmers to avail seasonal
agricultural operations. (Short term agricultural advances)
Comprehensive Crop Insurance Scheme which was introduced from Khariff in 1985
season. This scheme was later replaced as National Agricultural Insurance Scheme (NAIS)
Kisan Credit Card (KCC) Scheme was announced in budget during the year 1998-99.
This scheme was approved by Tamil Nadu also. In consultation with RBI, National Bank for
Agriculture and Rural Development added the Insurance scheme to farmers who hold KCC. This
insurance covers the Personal Accident Insurance Scheme (PAIS) which covers personal
accidents of farmers (KCC)
Self Help Group / Mahalir Thittam in Tamil Nadu
Tamil Nadu Government link the Mahalir Thittam in SHG scheme. The main features of
SHG are as follows:
d. Group in active existence for over 6 months
e. Group size in the range of 12 to 20 members
f. Minimum of 2 meetings per month
g. Group should not be a defaulter of any bank loan
h. Others- Regular savings by all members, Proper maintenance of accounts, etc.
NABARD provides refinance to State Co operative Bank (SCB) with the interest rate of
6%. In turn SCB provides at the rate of 9% as interest to farmers for their loans. This rate of 9%
is upto the amount of Rs. 50,000. If exceeds then rate of interest is as per SHG’s decision.
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Tamil Nadu State Co Operative Bank is situated in Chennai. 6 months to 2 year loans are
issuing by Tamil Nadu State Co Operative Bank under term loan and revolving credit.
Informal Co Operative Banks in Tamil Nadu
Informal co-operative bank is otherwise called as Urban Co-operative Bank (UCB).
These are functioning at urban level.
Urban Co operative Bank (UCB) in Tamil Nadu
To satisfy the farmers credit needs, in 2011 there are 120 UCBs in Tamil Nadu. Different
types of loans are issuing by UCB which includes jewel loan, womens’ credit, urban credit, etc.
UCB is famous in West Bengal. In Tamil Nadu it is not much fame as West Bengal.
Private bank
There are many private banks available to farmers which facilitates loans and advances in
different names. Some of the private banks are as follows: Karur Vysya Bank, Lakshmi Villas
Bank and others. Other banks includes: IndusInd Bank, Kotak Mahindra Bank, Yes Bank, Times
Bank (Merged with HDFC) and so on.
Finance schemes for Agriculture Providing by KVB in Tamil Nadu:
1. Green Cards
2. Farmers Two Wheeler Loans
3. Green Harvester Scheme
4. Green Trac (for tractor)
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5. Kisan Mithra Scheme
6. KVB happy Kisan
7. Green card plus
Green Cards
A credit facility provide to farmers who owned land, Cultivation, Satisfaction of dealings
in bank. It helps in credit facility to meet the working capital or any urgent short term
requirements of farmers. KVB fixed the Credit limit under this scheme is Rs. 10,000 and has no
margin is applicable.
Farmers Two Wheeler Scheme
Farmers Two Wheeler Scheme is famous scheme with farmers in this modern day. Under
this scheme KVB provides Loan to farmers to buy Two Wheeler by sanctioning loan of Rs.
40,000 per applicant/Individual. The loan is repayable in 3 years to 5 years. (This would be
based on the cropping pattern of the applicant)
Green Harvester
Individuals for combined harvesters KVB bank provides loans under this scheme. The
maximum limit of credit is upto the cost of harvest. Margin of the loan under this scheme is 15%
to 25%.
Green Trac
KVB bank provides tractor loan to farmers under the head Green Trac Scheme. This
scheme helps farmers to buy tractors or power tillers. Green Trac loan is provided by KVB to
farmers either by group or by individual. Farmers should possess a minimum land of 3 to 5 acres
for tractor loan and 2 to 3 acres for power tillers loan. A margin for the loan would be 15% to
25% under this scheme. Repayment Period is 7 years.
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Kishan Mithra Scheme
KMS is short form of Kishan Mithra Scheme. KVB provides loan to farmers for their
crop cultivation and consumption expenses which relates to agriculture. Here KMS period limit
is 1 year.
KVB Happy Kishan
Farmers who owned land and recommended by Supply Chain Agents approved by C.O.
can get KVB Happy Kishan loan. It is short term crop loan (Cultivation cost) including
consumption/Personal expenses.
Green Card Plus
Green Card Plus scheme is providing by KVB as extension of Green Card Loan. Under
this scheme both short terms loan and long term loan will be issued for working capital
requirement in agriculture.
Finance schemes for Agriculture Providing by LVB at Karur in Tamil Nadu
No Separate Schemes for farmers by LVB but giving benefits by add on methods. LVB
keep tie up with StarAgri for providing warehousing receipt financing and collateral
management services. This said above tie up helps in providing post harvest credit to farmers and
players in Agri business chain across India.
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Insurance
Insurance is another sector which protects farmers in several ways with several schemes.
Not only life schemes are available in insurance but there also avails with product schemes of
crop insurance, tractor insurance, seasonal insurance, etc. For the safety measures farmers should
use this.
Two Finance Schemes for Agriculture by insurance
Tamil Nadu Chief Minister flayed National Agriculture Insurance Scheme (NAIS) with
Modified National Agriculture Insurance Scheme (MNAIS) / Weather Based Crop Insurance
Scheme (WBCIS) without consulting state government. Tamil Nadu Chief Minister, Jaya feels
that by implementing the new insurance scheme from the 2013-14 rabi season, the Government
may only add to the farmers’ burden.
In 2012-13, more than 24 lakh farmers benefited from crop insurance schemes said by the
recent report of parliament. Maharashtra benefited the highest upto 13.18 lakh, followed by
Tamil nadu and Karnataka with crop insurance schemes of 6.91 lakh and 2.74 lakh respectively.
Finance Schemes for Agriculture under KVK in Tamil Nadu
In Tamil Nadu there are 30 Krishi Vigyan Kendra (KVK). Each KVK is for each districts
of Tamil Nadu. First KVK established in Tamil Nadu is in the district of Trichirappalli. KVK is
getting its sponser from Indian Council of Agricultural Research (ICAR). In 1977 Trichirappalli
district KVK was established. The primary objective is to share the agriculture technologies
avails in modern days.
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CONCLUSION:
There are many institutions helping farmers which lead their lives. However most of the
farmers are not with proper awareness due to the lack of education. Funds for modern technology
usage are more from the side of organized sectors but still farmers are not aware about it.
Farmers should be educated and provided with necessary awareness programmes to know the
new fund facilitations provided by organized and unorganized sectors. This may lead to growth
of production in farming business.
References: 1. Acharya S.S and Agarwal NL, 2006, Agricultural Marketing in India. Oxford & IBH Publishing Co. Pvt.Ltd. New Delhi. 2. Kulkarni, K.R. 1964, Agricultural Marketing in India. The Co-Operators Book Depot, Mumbai. 3. www.kvb.co.in 4. www.lvbank.com 5. www.icar.org.in 6. http://indianexpress.com/article/india/india-news-india/agenda-2016-three-things- government-can-do-for-agriculuture-today/
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