Credit Delivery In Rural India

• • Credit Delivery System In Rural Areas SAURABH JAIN 08 BS 000 3005

The Unfolding India Story

Rural India

Rural banking Rural banking Financing value chain

India – The Economy

…a global giant in making 2

The Rural Economy GDP (Rs. 28.3 Urban (Rs. 13.9

Rural (Rs. 14.4

Non-Agri (Rs. 8.4 Tn)

Agri (Rs. 6.0 Tn)

Share of non-agricultural output has exceeded agricultural output in the rural economy

Source: CERG (Consumer & Economic Research Group – Based on research by Omkar Goswami & Rama Bijapurkar)

Increasing Rural & Agri Credit Rural Credit (O/s)

1,44,23 3 Cr 6560 Cr

199900

Agri Credit (O/s)

64,972 Cr 4940 Cr

200809

199900

200809

Institutional Credit extended in rural India has grown by 19% p.a. (compounded) Source: RBI

The Unfolding India Story

Rural India India – The Economy

…a global giant in making

Credit Rural Delivery bankingin System Rural Areas

Rural Planning and Credit Department

Credit Delivery Policy

NABARD

NABARD • Framing policy and guidelines for rural financial institutions • Providing credit facilities to issuing organizations • Preparation of potential-linked credit plans annually for all districts for identification of credit potential • Monitoring the flow of ground level rural credit

NABARD Credit Facilities • Refinance  Facilities  • Direct Credit  • Investment Credit  • Rural Infrastructure  • Farm Sector Schemes  • Rural Non Farm Sector  • Rural Housing  • Others

Regional Rural Banks(RRB) • The government of India set up Regional Rural Banks (RRBs) on October 2, 1975. The banks provide credit to the weaker sections of the rural areas, particularly the small and marginal farmers, agricultural labourers, artisans and small entrepreneurs. – – – –

South Malabar Gramin Bank North Malabar Gramin Bank Pragathi Gramin Bank Shreyas Gramin Bank

And individual loans - both Farm and Non-Farm Farmer Finance

Agriculture (pre-harvest)

Agri Credit Line Farm Equipment

Agriculture (postharvest) Agriculture (infrastructur e)

Commodity Finance

Irrigation facilities Micro Warehouses

Jewel Loans

Non - Farm

Microfinance

The current rural banking has prohibitive cost High Transaction Costs

sk ri

bi lit y

h ig

H

pr o Lo w

ge ar

lo no ch ge te sa u gy

centric lHigh Manual

fi

ta

ch w Lo

lBranch

… with varied risks Price Risk

Crop

Yield Risk

Risk Corporate Payment Risk

Farmer Payment Risk

Risk Elements Liquidity Constraints No Sale Trans. by Farmer

Some Loan Products in Rural Areas

Canara Bank • Kisan Credit Card • Loans for Agri clinics / Agri business Centres • Minor Irrigation / Pumpset Loans • Farm Machinery Loans • Farm Development Loans • Vehicle Loan for Agriculturists • Loan for Cold Storage and Rural Godown • Canara Kisan OD

State Bank of India • CROP LOAN (ACC) • PRODUCE MARKETING LOAN SCHEME • LOAN AGAINST WAREHOUSE RECEIPTS / COLD STORAGE RECEIPTS • KISAN CREDIT CARD SCHEME (KCC) • AGRICULTURAL TERM LOANS (ATL) • LAND DEVELOPMENT SCHEMES • MINOR IRRIGATION SCHEMES

• FARM MECHANISATION SCHEMES • FINANCING OF COMBINE HARVESTERS • KISAN GOLD CARD SCHEME • LAND PURCHASE SCHEME • KRISHI PLUS SCHEME • ARTHIAS PLUS SCHEME • DAIRY PLUS SCHEME • FINANCE TO HORTICULTURE • LEAD BANK SCHEME • AGRI BUSINESS HEADS

Co-Operative Bank(KSCARDB) • • • • • • • • • • •

Ordinary Loans OL - FS (Ordinary loan) Scheme Loans ARF-FS (Scheme Loan Farm Sector) ARF-FM (Scheme Loans Farm Mechanisation) ARF-BG (Scheme Loan - Bio Gas) ARF-SGSY/IRDP ARF-FLEXI CREDIT ARF-Fin. TWO WHEELERS ARF-Agri. Clinics & Business ARF-Land Purchase

• Non - Farm Loans • NFS-CLS (Composite loan scheme) • NFS-SRWTOS (Small Road and Water Transport Operators Scheme) • NFS-ILS (Integrated Loan Scheme) • NFS-SGSY/IRDP • NFS-SEMFEX II • NFS-NABARD HOUSING • NFS- Education Loan • Housing Loans • NHB HOUSING • HDFC HOUSING

References:• • • •

www.nabard.com www.sbi.co.in www.canarabank.com www.rbi.org

Thanks