REPORT OF THE INTERNAL WORKING GROUP TO REVIEW AGRICULTURAL CREDIT

Key recommendations: 

• The Indian Banks’ Association (IBA) should introduce a web portal on the lines of PSB Loans in 59 Minutes to allow quicker credit access for the agriculture sector. The Centre launched the portal in November 2018 to provide loans of up to ₹1 crore to MSMEs in less than an hour.
  
  
• State governments having a highly restrictive legal framework should be encouraged to reform it on basis of Model Land Leasing Act proposed by NITI Aayog or the Land Licensed Cultivators’ Act, 2011 of Andhra Pradesh to improve formal lending to tenant farmers.
  
  
• The government should set up a federal institution, on the lines of goods and services tax (GST) Council to suggest and implement reforms in the field of agriculture.
  
  
• Banks should be allowed to give consumption loans to farmers upto a sanctioned limit of ₹0.1 million under Priority Sector Lending (PSL) on certain conditions. However, such loans will not classify for PSL-Agri.
  
  
• GoI and state governments should evaluate the effectiveness of current subsidy policies with regard to agri inputs and credit so as to improve viability of agriculture in a sustainable manner. In view of the above stated, loan waivers should be avoided.
  
  
• At present there is no database of the Indian agriculture sector. Thus, GoI with the help of state governments should develop a centralised database for agriculture capturing details related to crops cultivated, cropping pattern, output, sown/irrigated area, health of soil, natural calamity.
  
  
• GoI in partnership with state governments should set up a credit guarantee fund for the agriculture sector on the lines of credit guarantee schemes implemented in the MSME sector to cover the default risk of the borrowers.