Dena Bank is all set to become the first commercial bank to launch crop credit cards for farmers. The announcement of banks introducing kisan credit cards was made in the central budget for 1998-99 by finance minister Yashwant Sinha on June 1.
Sources at the bank said the scheme was being developed even prior to the budget announcement. It is still in the inception stage and the finer details are currently being worked out. The Dena board is yet to approve the scheme, they added.
The issue may come up for consideration at the board meeting scheduled for June 19. The finance minister stated in his budget speech, "Nabard is being asked to formulate a model scheme for issue of kisan credit cards to farmers on the basis of their landholdings for uniform adoption by banks so that the farmers may use them to readily purchase agricultural inputs such as seeds, fertilisers, pesticides, etc. and draw cash for their productive needs."
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Under Dena Bank's scheme, the maximum credit that farmers can obtain will be linked with their landholding and the income they derive from its use. Each card will exhibit the maximum credit amount eligible.
There will be no subsidy, either direct or cross, as the bank will charge the farmers for the use of this facility at commercial rate of interest, most likely at the PLR.
However, the credit cards facility will not be restricted to crop-related requirements. It will cover other requirements of the farmer community as well, such as education and consumable items, in addition to crop, fertilisers and pesticides, cattle and implements, said sources. Farmers can also use the card to withdraw cash from the bank account. The crop credit cards will cover the entire country but will have a sharper focus on areas with irrigation facilities, as this will ensure better recovery for the bank, said a senior official of Dena Bank.
"We do not envisage any problems with the recovery of credit, and our track record with recovery of crop loans has been good," claimed the official.
Initially, Dena Bank will issue crop credit cards to farmers who are already the bank's clients, and with whom the bank is comfortable. The eligibility criteria, however, are yet to be decided, said the official.
He was confident of the scheme being operational in the next three to four months. This should help the farmers in the country in the post-monsoon season, he added.zf