Improving Access to Credit for Farmers and Agri-businesses

The Union finance ministry has taken significant steps to enhance credit accessibility for farmers and agri-businesses by urging various banks to integrate with the National Credit Guarantee Trustee Company (NCGTC) and the e-Kisan Upaj Nidhi (e-KUN) portal.

Key Initiatives

• Electronic Negotiable Warehouse Receipts (e-NWRs): These receipts enable farmers to use stored produce as collateral for loans, facilitating easier access to credit. 
• Bank Participation: Eight banks have joined the NCGTC, and 26 have signed up for the e-KUN portal, which is part of the Jansamarth portal. 
• Public-Sector Banks (PSBs): PSBs have been directed to ensure that their sponsored Regional Rural Banks (RRBs) create dedicated loan policies for e-NWR financing and join both platforms promptly. 
• Promotion Strategies: Banks have been encouraged to promote pledge-based financing against e-NWRs through local outreach and social media campaigns. 

Recommendations and Suggestions

• Credit-Guarantee Fees: It has been suggested that these fees be deducted and remitted in one go at the time of disbursement to reduce administrative burden, aligning with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) guidelines. 
• Warehousing Facilities: There's a call for expanding the number of Warehousing Development and Regulatory Authority (WDRA)-accredited godowns and warehouses to strengthen the ecosystem. 

Credit Guarantee Scheme Details

• Coverage: The scheme covers both credit risk and warehouseman risk under agricultural credit. 
• Priority-Sector Lending: The Reserve Bank of India has increased e-NWR-backed loans under priority-sector lending from ₹75 lakh to ₹90 lakh for individual farmers and from ₹75 lakh to ₹4 crore for farmer producer organizations, corporate farmers, and cooperatives. 
• Guarantee Coverage:
  • 85% for loans up to ₹3 lakh for small and marginal farmers, women, SCs, STs, and specially abled farmers.
  • 75% for other borrowers.
  • 80% for loans above ₹3 lakh and up to ₹75 lakh for all eligible borrowers.
  • No coverage for loans above ₹75 lakh and up to ₹2 crore.