New Delhi: Agriculture experts say farmers don’t get proper benefits of collateral-free agriculture loan, emphasizing on providing proper knowledge to use modern technologies for getting more produce and proper utilization of loans in a better manner. Reserve Bank of India recently announced an increase in the limit for collateral-free agri loans.
Talking about the issue, Dharmendra Malik, agriculture expert, told ETV Bharat “Reserve Bank of India (RBI) first released the data regarding how many farmers have taken collateral-free loans before announcing this increased limit. The farmers face various difficulties for getting approval of loans as there is no clear forum to lodge complaints if any farmer doesn’t allow for loan. Announcing schemes is easy, however implementing them on ground level is different.”
Echoing similar sentiments, Siraj Husain, agriculture expert, told ETV Bharat, “These schemes put very marginal impact on farmers but tenants mostly left behind the scheme's benefits.”
The Reserve Bank of India recently announced an increase in the limit for collateral-free agricultural loans including loans for allied activities. The existing loan limit of Rs 1,60,000 per borrower has been raised to Rs 2,00,000.
The decision acknowledges the impact of inflation and the increasing cost of agricultural inputs on farmers. It aims to provide enhanced financial access to farmers, ensuring they have sufficient resources to meet their operational and developmental needs without the burden of providing collateral. This move enhances credit accessibility, particularly for small and marginal farmers (over 86 percent of the sector), who benefit from reduced borrowing costs and the removal of collateral requirements.
By streamlining loan disbursement, the initiative is expected to increase the uptake of Kisan Credit Card (KCC) loans, allowing farmers to invest in agricultural operations and improve their livelihoods. Combined with the Modified Interest Subvention Scheme, offering loans up to Rs 3 lakh at a 4 percent effective interest rate, this policy strengthens financial inclusion, supports the agricultural sector, and fosters credit-driven economic growth, aligning with the government’s long-term vision for sustainable agriculture, the Ministry of Agriculture & Farmers Welfare on Saturday said.
Vijay Sardana, agriculture expert, told ETV Bharat, “The government provides loans but doesn't educate them on how to use the loan amount. Taking a loan is a vicious circle for farmers especially at the time of repaying it.”
A farmer of Uttar Pradesh, Birender Singh Bant, told ETV Bharat, “The government should provide MSP on agriculture produce despite loans. If farmers will get proper price on their produce, there will be no need to take loans for them.”
