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International Multidisciplinary e –Journal. Author:Dr. Neena Chhokra(195-206)

www.shreeprakashan.com [email protected], Vol-IV,Issue- I,Jan-201595

EVALUATION OF KCC SCHEME IN SHAMLI DISTRICT

Dr. Neena Chhokra

Assistant Professor Department of Economics,

V.V. (PG) College Shamli, (U.P.)

Abstract:-

Agriculture has been main stay of our economy. More than 52% of people depend upon

agriculture for their livelihood even though contribution of Agriculture to GDP is 15%.

Nonetheless, the importance of Agriculture can not be underestimated for years to come. The

National Agriculture policy waves eloquent on the value of Agriculture. “Agriculture is a way of

life, a tradition, which for centuries thus runs the opening sentence of Agriculture Policy has

shaped the thought, the outlook, the culture and economic life of the people.” This paper intends

to evaluate KCC (Kissan Credit Card Scheme) in Shamli District This paper tries to analyze

whether this scheme is beneficial for small and marginal farmers.

Key Words:

Assessment of credit need of Farmers, problem in dispensing credit by banks, short term

financial crises of small farmers. Preventing undesirable practices of banks.

1. INTRODUCTION :

No doubt, Agriculture is the backbone of Indian Economy. At present 52% of working

population depends on Agriculture in india and this is the single largest informal sector. Its

contribution in GDP is 14.6% and in total Export 12.14%. This sector not only provides

employment but raw material to Industrial sector. The share of Agriculture in National Income

has been declining from 56.5 % in 1950-51 to 20% in 2009-10. To sustain the growth in

Agriculture, credit plays a crucial role positive relation between finance and agriculture

development, directly emphasizes the importance of banking. To cater the financial need of

farmers KCC ( Kissan Credit Card) scheme was introduced in 1998-99.

Positive relation between finance and agriculture development, directly emphasizes the

importance of Banking. “Financial stress is a key factor in suicides. The decision to commit the

suicide is more complex phenomena as many other farmers in similar social and economic

circumstances do not take this extreme step.”

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www.shreeprakashan.com [email protected], Vol-IV,Issue- I,Jan-2015Page 196

Banking is the force that is very lifeline of Indian economy touching every nerve and fibre of

Agriculture without banking we can not develop Agriculture. KCC (Kissan Credit Card), scheme

introduced by the public sector banks to cater the financial needs of small and marginal farmers.

The present study evaluates KCC scheme in Shamli District.

2. Research Objective:

The objective of the proposed study are: to study of KCC scheme available for Agriculture

community, whether this community has adequate access to KCC ? The problems being faced by

farmers to avail the KCC, to what extent the farmer have knowledge about KCC, scheme ?

To study the problem of loan recoveries faced by banking sector. Is there is any discrimination

between the big farmer and marginal farmer. To study the whether the KCC scheme help in

social-economic upliftment of the Agricultural community. To suggest guidelines for effective

implementation of the scheme. The key objectives of study are to: Discuss the concept of KCC,

in the development of agriculture. This paper Analyse the effectiveness of KCC scheme in terms

of ease, simplification, timely availability, cost and assurance in accessing short term credit from

formal financial institutions & to Find out the weakness in the scheme and to examine the

practical problems in the implementation of KCC. Study the gap between credit limits and actual

requirements. In brief the main purpose of the study is to make an objective assessment of the

scheme and to identify deficiencies to that the same could be overcome and the scheme can be

made more effective suited to the upcoming environment of delivering timely financial help to

the farmers of the Zone of Muzaffarnagar.

3. Review of the Literature:

On macro level regarding agriculture and finance, there is no scarcity of literature. But regarding

this particular region and this particular scheme (Shamli District) there is no systematic academic

work which could be reviewed with reference to the chosen problem. Despite, our description of

available literature would like to assist or to add or to locate the workable areas of investigation

i.e. Shamli District. A chronological description of literature and findings of the authorities are

being enlisted as follows:

Marketing strategies adopted by Punjab National Bank and its success has been discussed by

Shri Malkiet Singh (Sr. Manager of Punjab National Bank) as a project report for

management institute.

The topic also has been discussed in Annual Credit Plan 2006-07 of Lead Bank in Shamli

District.




Salient features and operational guidelines of KCC by Lead Bank. ( in Shamli District) have

been published by H.O. (Head Office) PNB New Delhi.

Report on "Scheme for Financing under PNB Krishi Card' (KCC) has been published by

"Priority Sector and lead Bank division Agriculture Cell" PNB New Delhi in th eYear 2004.

"The Kisan Credit Card Scheme, impact, weaknesses and further reference" study done by a

team of National Council of Applied Economic Research, 2005. Dr. Anil Sharma led the

study team.

4. Research Methodology:

So far as the question of methods of the propsed study is concerned, “ Descriptive Research

Method” would be adopted. Secondary data would be collected and utilized from the published

as well as the unpublished sources. The study when complete is expected to go a long way in

helping the beneficiaries as also the planners. The methodology would be of such nature as may

lead to logical and systematic body of the proposed research problem and may be able to be

conclusive. It will also be based on primary data obtained by survey method.

5. Evolution of KCC Scheme:

5.1 Meaning and Feature of KCC :

“The kisan credit card (KCC) scheme was introduced in 1998-99 as a means to facilitate farmers

access to short learn credit from the formal financial sector2”

. Compare to old system of short

term credit delivery this innovation in short term credit Provision was expected to generate

several benefits to both farmers as well as banks. The card has predetermined limit fixed on the

basis of operational Land holding, cropping pattern and scale of Production credit requirement. It

is valid for five years and has Provisions such as revolving cash credit facility Involving any

number of withdrawls and repayments within the Prescribed Limit.

5.2 Features of KCC

Valid for Five years

Flexibilities of repayment of loan.

Rescheduling of loans in case of damage to crops due to natural calamity.

Provisions for Personal Insurance against Permanent disabilities or accidental death.

Provision for incentives and rewards to these borrowers whose repayment track is good.

Provision of adequate and timely supply of short term credit to the farmers.

Saving in cost of borrowing from formal sources as compared to other schemes.




Mechanism to advance or issue KCC is on crop, specific basis, size of Land holding or

irrigated area.

Not compulsory for borrower to open a saving bank account with the Bank Branch.

KCC very useful to the farmer for purchase of Inputs in a cost effective manner.

Credits to take care of cultivation expenses include ancillary activities of the entire year.

Credit to farmers in hassle free manner.

Frequent need based drawals /repayments reduce interest burden for farmers.

Credit balance in kissan credit card account may earn Interest in saving bank account.

High Degree of transparency in operations.

KCC Scheme ensured timely and adequate provision of credit.

5.3 ABOUT THE STUDY AREA :

Shamli is a district in the Indian state of Uttar Pradesh. This district was carved out from

Muzaffarnagar District on 28 September 2011 as Prabudh Nagar and renamed Shamli in July

2012. Shamli is the headquarters of the district. Shamli is located approximately 100 kilometres

(62 mi) from Delhi along the Delhi–Saharanpur highway. The district lies in the fertile Doab

region and hence the major occupation is agriculture. The district is known for its sugar mills and

supplies sugar to neighbouring areas.

5.3.1 Geography

Shamli is located at 29.45°N 77.32°E. It has an average elevation of 248 metres (813 feet). It is

around 99 km from Delhi, 38 km from Panipat,70 km from Meerut, 40 km from Karnal and

65 km from Saharanpur. It lies to the east of the Yamuna River, which marks the borders of two

Indian states, Haryana and Uttar Pradesh. The district lies in the fertile Doab region between the

Ganges and Yamuna.Shamli is main marketing centre for 40km surrounding circle.

5.3.2 Demographics

People of the area adhere to Hinduism, Islam, Jainism, Sikhism and Christianity, although the

majority of the populations are either Hindu or Muslim.

According to the 2001 census, males constitute 54 percent of the population and females 46

percent. Shamli has an average literacy rate of 59.5 percent, which is lower than the national

average of 64 percent. Male literacy is 70 percent and female literacy is 57 percent. In Shamli, 15

percent of the population is under 6 years of age. Shamli district along with Muzaffarnagar


https://en.wikipedia.org/wiki/India

https://en.wikipedia.org/wiki/States_and_territories_of_India

https://en.wikipedia.org/wiki/Uttar_Pradesh

https://en.wikipedia.org/wiki/Muzaffarnagar_district

https://en.wikipedia.org/wiki/Shamli

https://en.wikipedia.org/wiki/Delhi

https://en.wikipedia.org/wiki/Doab

https://en.wikipedia.org/wiki/Delhi

https://en.wikipedia.org/wiki/Panipat

https://en.wikipedia.org/wiki/Meerut

https://en.wikipedia.org/wiki/Saharanpur

https://en.wikipedia.org/wiki/Yamuna_River

https://en.wikipedia.org/wiki/Haryana

https://en.wikipedia.org/wiki/Doab

https://en.wikipedia.org/wiki/Ganges

https://en.wikipedia.org/wiki/Hinduism

https://en.wikipedia.org/wiki/Islam

https://en.wikipedia.org/wiki/Jainism

https://en.wikipedia.org/wiki/Christianity

https://en.wikipedia.org/wiki/Literacy_rate



district has been a target of right-wing Hindutva politics since 2013, it was affected during the

2013 Muzaffarnagar riots.

5.3.3 Economy

Major industries include agriculture and retail. The standard of living is high because of several

factors, including the rich farmland of the Doab between the Ganges and the Yamuna, the

network of sugar mills in the area, and the proximity and easy access to Delhi and other

important industrial towns. It is also famous for its steel and paper industry. It is known as an

international maker of wheel rims

5.4 Evolution, Innovation and Assessment of the Impact of KCC

No doubt, First Five year plan had its main focus on agriculture. A series of land reform, then

Green Revolution contribute a lot. But since 1991 we ignored Ariculture. Our main stress was on

Industrial Development. With the passage of time we, once again realized the importance of

Agriculture development. In this direction, bank, on national level introduced this scheme

(KCC) to develop Agriculture.

In Shamli Distirct, through lead bank (PNB), The scheme (KCC) has been introduced. The study

area cover 5 blocks 210 villages, 5 tehsil, 210 gram sabhas under the scheme. This scheme take

the responsibility of developing Agriculture in the region. Study reveals how the KCC Scheme is

running in Distt: Shamli

Reviewing progress and evolution of the scheme study will focus on changes that

have been brought about by the scheme. To take a holistic view of changes that can be identified

as consequences of the introduction of KCCs. We look at several indicators:

5.4.1 Amount of Total Agriculture Loan

Year Total

2012-13 789.18

2013-14 808.00 Crore

2014-15 1037.43 (Projected)

Comparing these years total agriculture loan in study area increased to great extent.


https://en.wikipedia.org/wiki/2013_Muzaffarnagar_riots



5.4.2 KCC Card & Amount Released

Year Total KCC % Achievement Outstanding KCC A/c Amount

2012-13 19360 109.85% 94276 643.22 Crore

2013-14 33730 96.30% 118819 830.29 Crore

2014-15

(Projected)

64272 - 105417 1077.11

During this period Total KCC Cards, Amount of KCC outstanding increased to satisfactory level.

5.4.3 During 2012-13 Progresses of KCC in District Shamli

Amount in (Thousand)

Name of Bank Fresh KCC Issued 31.03.2013 KCC Outstanding 31.03.2013

Ac Amt Ac Amt

Punjab National of Bank 556 78064 19360 2437281

State Bank of India 2598 387100 10125 1070500

Central Bank of India 168 17581 482 37200

Canara Bank 208 71908 9405 921907

Union Bank of India 73 10000 748 93634

Allahabad Bank 111 31100 201 119500

Indian Bank0 1209 193056 3412 376900

Punjab & Sind Bank 62 29443 2365 254122

UCO Bank 174 29378 67 30872

State Bank of Patiyala 144 22564 545 60332

Indian Overseas Bank 82 15000 729 68118

Bank of Baroda 80 19500 277 28458

Syndicate Bank 1 110 131 36600

Corporation Bank 26 6676 1 110

United Bank of India 0 0 45 9289

HDFC Bank 9 6001 20 10287

ICICI Bank 0 0 0 0

Gramin Bank 1261 6001 1730 175431

Distt Co.Op.Bank 2647 169540 44633 701616




5.4.4 During 2013-14 Progresses of KCC in District Shamli

Amount in (Thousand)

Name of Bank Fresh KCC Issued 31.03.2014 KCC Outstanding 31.03.2014

Ac Amt Ac Amt

Punjab National of Bank 7392 73.41 19746 238.56

State Bank of India 6948 88.18 11105 129.85

Central Bank of India 119 1.60 395 2.97

Canara Bank 5620 90.32 9122 115.12

Union Bank of India 1214 10.29 4298 42.06

Allahabad Bank 42 0.99 910 12.43

Indian Bank0 1255 18.77 3682 42.93

Punjab & Sind Bank 330 4.74 2696 47.64

UCO Bank 21 0.83 163 6.89

State Bank of Patiyala 246 2.08 1119 12.53

Indian Overseas Bank 190 4.01 744 9.26

Bank of Baroda 62 1.04 345 4.98

Syndicate Bank 102 4.15 203 7.22

Corporation Bank 23 0.30 23 0.30

United Bank of India 363 6.75 397 7.76

HDFC Bank 0 0 0 0

ICICI Bank 48 1.05 108 2.22

Gramin Bank 1036 13.78 6850 69.85

Distt Co.Op.Bank 7738 7.69 56806 84.99

If we compare progress of KCC during these two years. Role of commercial Bank Particular

Lead Bank PNB is larger. All other Banks also contribute to great extent towards the success of

this scheme in study area.




5.4.5 Overall Changes in farming conditions in study area after launching of KCCs-

Perceptions of Banks

Sl.

No.

Particulars Commercial

Bank

(Percent)

Co-

operative

Bank

(Percent)

Regional

Rural

Banks

(Percent)

All

institutions

(Percent)

I NC I NC I NC I NC

a. Condition of land 38 62 57 43 50 50 51 49

b. Condition of livestock 75 25 33 67 75 25 51 49

c. Irrigation infrastructure 38 62 43 57 50 50 43 57

d. Out Put from land 88 12 81 19 88 12 84 16

Source – Sample survey.

Notes:- I= Improvement and NC= No. change

According to commercial bank there is maximum improvement in output from

land that is 88%. In co-operative bank’s view condition of land improves 57 percent while output

increases by 81percent. In RRBs view output from land improves los to 88% from above table. It

becomes clear that condition of livestock output from land improves much s compared to other

particulars condition of land and irrigation infrastructure.

5.5 PROBLEM AREAS FOR BENEFICIARIES :

As each coin has been two sides, similarly, KCC scheme has also the positive as well as negative

side Negative side guide us to right path without considering the problems faced by farmers and

bank officials. This study would be incomplete. After survey and great deal of quarries the study

finds out the Problems faced by KCC holders under the KCC scheme which are as follows:-

1. After 64 years of independence, Indian farmer is still illiterate in certain aspects.

2. He is not thoroughly aware of the schemes meant for him or to develop agriculture.

3. He still hesitates to visit bank.

4. To some extent the poor responses of farmers on questions related to their land holdings,

conditions of their Livestock and irrigation infrastructure are understandable because the

amount borrowed through KCCs is basically meant for meeting short term production

requirements and has very little to do with improvements in Land holdings, Livestock and




irrigation infrastructure at the farms level because improvement in these assets are funded

through Medium and Long term loans.

5. Farmers are Dissatisfied about the credit limit fixed by banks. There is wide gap between

Actual requirement and credit Limit. This fact becomes clear from the findings under

survey that all type f farmers borrow from informal sources i.e. Money lenders to fulfill

the short term requirements.

6. Among the hassles that farmers still find to borrowing from formal sources the insistence

on collateral seems to be the biggest one.

7. The Procedure and paper work is another biggest problem faced by farmer which is

complicated. The proof of khasra khautni creates lot of problems to borrower and also

leads to corruption.

8. A few cases of corruption were also reported. A chain of intermediaries between

borrower and Bank raises the Actual cost of borrowing.

Reasons for Non-Repayment of Loan Taken by Farmers under the KCC Scheme in Study

Area

Sl.No Name of the

Blocks

Problem faced by KCC holders in repayment

Crop

Peris

hed

Delay

in

inco

me

Inadequ

acy of

Income

Lack of

marketi

ng

facility

Unforeseen

Contingenc

ies

Indifferen

ce towards

repayment

Other

reas

ons

1 Kairana 1 43 15 11 5 10 15

2. Shamli 19 37 19 5 3 6 11

3. Thanabhawan 1 53 25 3 13 2 3

4. Oon 10 28 37 1 10 6 8

5. Kandhla - 51 11 - 9 17 12

Source: Personal survey in each block (Number of respondents in each block = 100)

Above table depict that Delay in income has major role regarding non repayment of loan taken

by farmers under KCC scheme in study area, Thana Bhawan 53%, Then Kandhla, Kairana,

Shamli Oon respectively.




5.6 Concluding remarks and Policy implication:

The KCC scheme has made a significant impact on the availability of short term credit from

formal sources at farm level. The amount borrowed from formal financial institutions by all

categories of KCC holders taken together has increased by around 50% after the issuance of

KCCs. Among various categories of farmers the extent of the increase in availability of short

term credit ranges between 46% of small farmers to 52% for large farmers. Further the amount

of short term credit borrowed by KCC holders was 2.8 times the amount borrowed by those who

do not have KCCs.

While there are several policy initiatives, which need to be taken to revitalize rural credit system,

In the context of KCC, however, the policy Measures, which emanate from the analysis carried

out in the study can be clubbed into following three categories.

1. Expanding coverage under the kcc scheme.

2. Streamlining legal and institutional hurdles.

3. Maintaining sustainability and Long-term viability of the scheme.

Indigenous bankers should be allowed to do the money lending business only after getting

license from the appropriate authority.

Bank should make proper appraisal of the proposals submitted for availing

Agriculture loan or KCCS. Branch Managers should be made accountable for Non-performing

accounts. For reducing the time taken in issuing KCC, the procedure should be simplified.

Field officers of banks should keep themselves in constant touch with the KCC holders

for the use of the borrowed amount only for the intended purpose. In the end it is important to

observe that while streamlining credit delivery mechanisms is necessary, it is not sufficient

because there are several improvements that need to be made to make Indian agriculture more

competitive and profitable profession. Only an efficient and competitive agriculture will be able

to sustain the long term viability of KCCS scheme. Hence special care has to be taken to ensure

long term viability of this scheme for facilitating farmer’s access to short term credit.




References:-

Asian Productivity Organization (1984): Farm Credit Situation in Asia, APO, Tokyo.

Bankers Institute of Rural Development (2001): Support From the Banking System: A Case

Study of Kisan Credit Card, a Study for the Planning Commission, Planning Commission,

New Delhi.

Dandekar, V.M. and F.K. Wadia (1989): Development of Institutional Finance for Agriculture in

India”, Journal of Indian School of Political Economy, Vol. 1 (2).

Desai, D.K. (1988): “Institutional Credit Requirements for Agricultural Production 2000 A.D.”,

Indian Journal of Agricultural Economics, Vol. 43 (3).

Government of India (Various Volumes): Economic Survey, Ministry of Finance, New Delhi.

Government of India: Reports of the Commission for Agricultural Costs and Prices, Department

of Agriculture and Co-operation, Ministry of Agriculture, New Delhi.

Hulme, David and Paul Mosley (1996): Finance against Poverty, Rutledge, London and New

York.

Kahlon, A.S. (1991): “Institutional Credit and Over dues: Borrower’s Angle”, Economic and

Political Weekly, February 2.

National Bank for Agriculture and Rural Development (various volumes): Annual Reports,

NABARD, Mumbai.

National Bank for Agriculture and Rural Development (2010) Report of the Expert Committee

on Rural Credit, NABARD, Mumbai.

National Sample Survey Organization (2009): Operational Land Holdings in India, 2009-2010

Salient Features, NSSO, New Delhi.

Rath, N. (2009) “Institutional Credit for Agriculture in India”, Journal of Indian School of

Political Economy; Vol. 1 (2).

Reserve Bank of India (2008): A Review of the Agricultural Credit System in India, RBI,

Mumbai

Reserve Bank of India (1997): Report of the High Level Committee on Agricultural Credit

through Commercial Banks, RBI, Mumbai.

Reserve Bank of India (various volumes): Report of Trend and Progress of Banking, RBI,

Mumbai.

Reserve Bank of India (2004): Interim Report of the Advisory Committee on Agricultural Credit,

Vyas Committee, RBI, Mumbai.




Sample Survey and Ministry of Agriculture (2008): All India Report on Agricultural Census,

Department of Agriculture and Cooperation, New Delhi.

Sharma, Anil (2001): “The Agricultural Sector” in Economic and Policy Reforms in India,

National Council of Applied Economic Research, New Delhi.

Von Pischkes, J.D. and D.W. Adams (1980): “Fungibles and the Design and Evaluation of

Agricultural Credit Projects”, American Journal of Agricultural Economics, November 2009.

JOURNALS AND REPORTS:

1. Bankers Institute of Rural Development (2001):

Support from the banking system: A case study of Kisan Credit Card. A study for the

Planning Commission, New Delhi.

2. Department of Research and Statistics (of the R.B.I.)

a) R.B.I. Bulletin (Monthly).

b) Report on Currency and Finance (Annual).

c) Statistical tables relating to banks in India (Annual).

d) Reports on the trend and progress of Banking in India.

3. National Bank for Agriculture and Rural Development (2010)

Report of the Expert Committee on Rural Credit, NABARD Mumbai.

4. Reserve Bank of India (2005.)

“A Review of the Agriculture Credit System in India” RBI Mumbai.

5. Reserve Bank of India (1997):

“Report of the High Level Committee on Agriculture Credit through Commercial Banks”

R.B.I. Mumbai.

6. Reserve Bank of India (2004):

“Interim Report of the Advisory Committee on Agriculture Credit” Vyas Committee,

R.B.I. Mumbai.

7. Annual Reports: Reserve Bank of India.

8. World Bank: World Development Report.

9. Sankhiki Patrika: “Janpad Muzaffarnagar, Office of the Economic and Statistical Officer,

Economic and Statistical Division, State Planning Organization, U.P.

10. PNB CREDIT CARD: “Salient features and operational guidelines”.

11. P.N.B. “Annual Credit Plan-2009-2010 M. Nagar (U.P.)


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