For the first time, credit cards for farmers, courtesy SBI
India's biggest public lender, the State Bank of India, is introducing special credit cards for farmers, probably the first such product for the community. Unlike the existing Kisan Credit Cards (KCC), the new SBI card will offer 40 days of credit at low interest rates to farmers. For now, it is being launched on pilot basis in Gujarat, Rajasthan and MP.
How would the new credit card for farmers work?
The SBI credit card for farmers would offer them 40 days of credit. Interest rates would be lower than that on other SBI cards. There will be limits. A card holder would be allowed to use about 20% of the credit limit on consumer items, and the rest only on agricultural products. In KCC, the loan amount is instantly debited from the account.
100 applications already received, says SBI chairman
Chairman Rajnish Kumar said SBI had already received about 100 applications for such credit cards. If it's successful, it will be rolled out across India. For this scheme, the bank has tied up with its subsidiary SBI Cards and Payments Services.
Last year, SBI had a one-time settlement scheme for farmers
Last September, the bank had attempted to lure farmers with a one-time settlement scheme. Under the "Rinn Samadhan Program," a farmer with a Rs. 20L loan could settle 50% of his dues, and the remaining would be waived. He can again apply for a loan in 30 days, SBI said. In June'17, SBI's loan outstanding to the agricultural sector was Rs. 1,89,100cr.
Indebtedness a major reason for farmers' suicides
Many farmers are buried under vicious cycles of debt. According to government figures, over 12,000 farmers' suicides have been registered annually since 2013. The NCRB listed bankruptcy, indebtedness, farming-related issues, illness, and drug or alcohol abuse as the primary reasons for farmers' suicides.
