The quantum of KCC
As per RBI’s Trends and Progress Report 2021, total 73 million are operative and the value of outstanding agricultural loans stood at 7.53 trillion Indian rupees.
A huge difference was observed in the quantum of KCC limit sanctioned to farmers across the sample states. The average amount of loan sanctioned per borrower was varying from Rs 38,618 in case of Assam to Rs. 483,406 in case of Punjab.
These loans becoming problematic as there is no collateral, no fixed period for repayment and the farmers repay very less amount that is just enough to keep the accounting standard.
Although the challenges cited are, in part, driven by costs and the policy environment, many hurdles could be overcome with access to reliable farm-level data. This creates an opportunity for technological interventions in the agriculture sector that could improve banks’ abilities to obtain and verify farmer data resulting in greater access to finance for SMFs.
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