COVID-19 crisis: Finance Ministry seeks to boost credit flow to farmers

By: |
April 18, 2020 5:26 AM

In another meeting, via video conference, with the top bankers, the ministry has already reviewed the lenders’ preparedness to support the credit appetite of the economy once the lockdown is lifted.

Over 2,000 rural branches of various banks were tasked with providing such cards to the eligible farmers. Over 2,000 rural branches of various banks were tasked with providing such cards to the eligible farmers.

The finance ministry held a meeting with top executives of state-run banks on Friday and reviewed the distribution of Kisan Credit Cards (KCC) to beneficiaries of the PM-Kisan scheme so that they can have access to short-term institutional credit at cheaper rates ahead of the Kharif sowing season and better weather the COVID-19 crisis. Through the KCC, PM-Kisan beneficiaries can obtain short-term loans at just 4% interest if they pay on time.

In another meeting, via video conference, with the top bankers, the ministry has already reviewed the lenders’ preparedness to support the credit appetite of the economy once the lockdown is lifted. It’s also in talks with the central bank to ensure that credit flow to critical sectors of the economy, especially MSMEs, isn’t hampered.

The saturation drive for the KCC was launched by Prime Minister Narendra Modi in February. Under it, over 25 lakh PM-Kisan beneficiaries were then provided the Kisan credit cards. Over 2,000 rural branches of various banks were tasked with providing such cards to the eligible farmers. No collateral is required for loans up to Rs 1.6 lakh from SBI. Farmers who take loans through KCC card are also eligible for cover under the crop insurance scheme. The Kharif sowing typically starts from June, with the arrival of seasonal monsoon showers.

“The government wants to ensure that farmers have access to cheaper credit even in times of the pandemic,” said a top banker, who attended the meeting.

As for easing credit flow, already, several PSBs, including SBI and Punjab National Bank, have hiked the working capital limit for eligible customers to help them tide over a temporary liquidity shortage.

The department of financial services has already held a meeting with top bankers on enhancing credit flow and the implementation of the Rs 1.7 lakh crore relief package for the poor and the vulnerable under the Pradhan Mantri Garib Kalyan Yojana, announced late last month.

State-run lenders are staring at massive losses, especially in the first half of FY21, due to the COVID-19 outbreak and a lockdown, which will likely erode their capital position. So infusion will be critical, especially in the September and December quarters, once the impact of the pandemic hopefully starts to ebb and the economy needs a massive credit push to get back on its feet, bankers say. PSBs will have to do the heavy lifting, especially as shadow-lenders’ ability to lend will remain severely impaired by the crisis, they add.

Do you know What is India expected to grow 10 pc during current fiscal: NCAER Director General Poonam Gupt,FinMin releases Rs 9,871 cr grant to 17 state, Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1India most cost-effective globally in rooftop solar power, report says
2Coal ministry to augment fuel supply to power sector from captive mines
3India’s economy recovered very fast after tough phase of COVID-19 pandemic, says PM Modi