RBI issues guidelines on loans to landless farmers

Taking forward the government's Budget proposal to provide finance to landless farmers, RBI today set out detailed guidelines for banks for giving such loans and asked them to ensure meeting targets.
The banks would also have to provide regular progress reports to NABARD in this regard.
In the Union Budget 2014-15, it was declared that 5 lakh Joint Liability Groups (JLGs) of land-less farmers will be financed through NABARD in the current financial year.
NABARD has evolved a revised approach for financing of JLGs on a mission mode both for farm and non-farm activities.
As a few members of Self Help Groups (SHGs) may move faster to start or expand their economic activities and requiring much higher levels of loans than other members in the group, RBI said a JLG may be created consisting of such members of one or more SHGs.

However, it said the members of the JLG will continue to remain members of the SHG and continue to participate in the activities of SHGs a.

"Banks may encourage creation of such enterprise/ livelihood based JLGs within SHGs. Banks may finance these JLGs in addition to the loan/credit limit extended to the SHGs," RBI said in a notification.
It said certain deserving small farmers, marginal farmers, tenant farmers, oral lessees, share coppers, micro entrepreneurs or artisans who may not have been covered by SHGs, may also form a JLG.
"The JLG formed of such members may also be provided with adequate credit support by banks."

It further said banks may undertake efforts and finance JLGs on a cluster basis for agriculture as well as allied sectors and non-farm activities.
"Such an approach may help the JLGs to contribute positively to the agricultural value chain and enhance agricultural production and productivity by leveraging on economies of scale.
"This approach would be particularly effective in command areas of developed watersheds, tribal area schemes and product based clusters," RBI said.
Among others, it said bank may either use their own techniques for financing the JLGs or use the tool suggested by NABARD for appraising and financing them.