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In a big relief to small and marginal farmers the Reserve Bank of India (RBI) on Friday has hiked the limit for collateral-free loans for agricultural farmers from Rs 1.66 lakh to Rs 2 lakh per borrower.
In his address after the completion of the Monetary Policy Committee (MPC) meeting, Governor Shaktikanta Das said that "taking into account the rise in agricultural input costs and overall inflation, it has been decided to increase the limit for collateral-free agriculture loans from rupees 1.6 lakh crore to rupees 2 lakh per hour; this will further enhance credit availability for small and marginal farmers." The apex bank will issue a separate circular to notify the enhancement scheme of the collateral-free loan shortly. A collateral-free business loan is a financing system where the farmers do not need to pledge assets as security for getting loans. The last time the limit for collateral free agriculture loans was revised in 2019 by the central bank, when it was raised from Rs. 1 lakh to Rs. 1.6 lakh. The Department of Financial Services in February 2019 has also waived the processing, documentation, inspection, and ledger folio charges and all other service charges for KCC/crop loans up to Rs. 3 lakh, keeping in view the hardship and financial distress of small and marginal farmers. Earlier in 2014 RBI, vide their circular dated June 27, 2014, had advised banks and financial institutions to include in their credit appraisal processes/loan policies suitable provisions for obtaining Credit Information Reports (CIR) from one or more Credit Information Companies (CICs) so that the credit decisions are based on information available in the system. The Kisan Credit Card (KCC) Scheme ensures easy credit access for various farmer categories, including owner cultivators, tenant farmers, sharecroppers, and more. The KCC scheme provides for the issue of an ATM-enabled RuPay Debit Card, inter alia, with facilities of one-time documentation, built-in cost escalation in the limit, and any number of withdrawals within the limit, etc. The KCC facility itself is an overdraft facility from which withdrawals can be made through RuPay Debit Card up to the sanctioned limit. (ANI)
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