Kisan credit card scheme: an economic evaluation

Abstract

The main objectives of the study entitled “Kisan Credit Card Scheme: An Economic Evaluation are to study the growth of Kisan Credit Card Scheme in Kerala, to examine the pattern and adequacy of credit supply, to study the timeliness, repayment and overdue pattern of the scheme and to identify operational problems in order to suggest measures for improvement. The study was conducted in Kannur district. From the secondary data collected it was found that maximum number if cards were disbursed in Kannur district. Multistage random sampling technique was used for selection of samples. Thirty farmers each were selected from three banks namely Syndicate Bank (Mambaram), North Malabar Gramin Bank (Pala) and Pathiriyaad Service Co-operative Bank making the sample size to 90. The survey was conducted in May 2007 using a well structured interview schedule. The study of the status of Kisan Credit Cards revealed that for Primary Agricultural Credit Societies there was considerable increase in the number of cards and loan amount disbursed through the scheme. In RRBs more number of cards was disbursed through North Malabar Gramin Bank (NMGB) than South Malabar Gramin Bank (SMGB). Out of the total Kisan Credit Cards issued through Commercial Banks, 48.3 per cent was supplied by State Bank group, 45.5 per cent by nationalized banks and 6.2 per cent by Private Sector Banks. Nationalized Banks had disbursed maximum amount of loan through Kisan Credit Cards (45.7 per cent) followed by State Bank (36.4 per cent) and Private Banks (14.9 per cent). Assessment of adequacy of loan under the scheme was studied by cross tabulating the data pertaining to the adequacy of loan based on adequacy measure and the opinion survey on individual bank basis. The results showed that out of the 30 farmers who took loan under the scheme from Commercial Bank, only nine had received adequate amount of credit under the scheme (30 per cent) when opinion survey and adequacy measure were considered together. In RRB,3.3 per cent and in Co-operative Bank 6.7 per cent of the card holders got adequate credit when adequacy measure and opinion survey was considered simultaneously. With respect to the timely availability of credit under the scheme, only 25.6 per cent of the total respondents had stated that credit was not available on time while the rest 74.4 per cent had opined that credit was available at the proper time without any delay. Out of the total sample of 90 respondents, 37.8 per cent had completely repaid the loan amount and 62.2 per cent had partially repaid the loan amount. Among the card holders from Commercial Bank, 26.7 per had repaid the loan completely and 73.3 per cent had repaid it partially while in RRB 53.3 per cent repaid completely and 46.3 per cent repaid partially. In Co-operative banks, 37.8 per cent had repaid the loan completely while 62.2 per cent had partially repaid the loan. A few operational problems like high rate of interest in RRB, inadequacy of credit from RRB and Co-operative bank, were noticed during the study. The credit limit fixed based on the scale of finance was need to be revised. Suggestion was made for provision of a pass book to the borrowers and the credit card is to be linked with ATM facility.