Agricultural Banking - Questions & Answers

7/30/2019 Agricultural Banking - Questions & Answers

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AGRICULTURAL BANKING – QUESTIONS / ANSWERS.

1. Define the following categories ?

a. Small Farmer : Small farmer is one whose land holdings do not

exceed 5 acres of dry or 2.5 acres of wet land.b. Marginal Farmer: Marginal farmer is one whose land holdings do not

exceed 2.5 acres of dry land or 1.25 acres of wet land.

c. Agricultural labourers: A person without any land other thanhomestead and deriving more than 50% of his income fromagricultural wages as labourers.

d. Non-agriculture/ Rural artisans: Residents of the villages 50% of whose income is derived from non-agricultural sources

2. When did the NABARD come into existence?Based on the recommendations of the Committee for review of arrangements for institutional Credit to Agriculture and Rural Development(CRAFICARD) National Bank for Agriculture and Rural Development(NABARD) came into existence on 12.7.1982.

3. What are the functions of NABARD?

The functions of NABARD are broadly classified into three as givenhereunder:

a) CREDIT:

(I) It provides short term credit to SCBs, RRBs, and AFIs(15months),

(II)Medium Term loans to SCBs, RRBs, SLDBs and AFIs (18monthsto 7 years)

(III) Long Term credit to SCBs, SLDBs, RRBs, commercialBanks, AFIs (7years to 15 years):

b) Development:

i. Co-ordination and review,

ii. Institution building

iii. Assistance to GOI, RBI & State Govts.iv. Agency to GOI, RBI and State Govts.,

v. Direct loaning to approved govt., projects.

vi. Training and expertise skills to bank officials

c) Regulatory:

i) Inspection of Co-operative banks and RRBs,



ii) Permission for opening of new branches of cooperative banks andRRBs.

4. What is the eligibility criteria for drawing NABARD refinance?

NABARD provides refinance in two ways as under;

1. Automatic refinance for all government sponsored programmes,

2. Schematic refinance for the project approach taken–up by Banks for development. The eligibility for drawing refinance is linked to recoveryperformance of the Branch.

Category A: Recovery 60% and above– Unrestricted Refinance.

Category B: Recovery below 60% restricted refinance.

5. What is a bio-gas plant?

It is an installation where cattle dung is digested with the help of microbes.

As a result of this ‘methane gas’ is produced which is helpful as fuel for cooking ,and lighting. The digested manure will be rich in nutritive value andcan be used as a manure.

6. What are the various stages involved in the preparation of Dist. CreditPlan?

Branches prepare their credit plans for the forthcoming financial year basedon the village credit plans. The branch credit plans are consolidated intoBlock Credit plans.

The lead Bank of the district would consolidate the Block plans into AnnualCredit plan of the district.

7. What is the ‘bench-mark’ to be achieved under Agri. Advances?

Banks have to lend 18% of the Net Bank Credit to agriculture segment. Outof this, advances under direct agriculture should be 13.5% and the balanceof 4.5% may be under indirect advances.

8. What is a crop loan?

It is a production credit sanctioned for taking-up seasonal agriculturaloperations.

9. What is a subsistence farming?Subsistence farming arises when the land holding is very low and thesurplus generated from the farm operations is so meagre that while it maycover the cost of cultivation it may not be adequate to meet the farmer’sfamily expenses.

10. What are scales of finance for crop loans?



The District Technical Committee / State Level Bankers’ Committee willdecide the amount of loan to be financed for each crop grown in the State.

11. What is NAIS?

National Agricultural Insurance Scheme (NAIS) is the revised Crop

Insurance scheme introduced by the Govt. of India.

12. What are the objective of the NAIS?

i. To provide insurance coverage and financial support to the farmers inthe event of failure of any of the notified crops as a result of naturalcalamity, pest & diseases.

ii. To encourage the farmers to adopt progressive farming practices, highvalue inputs and higher technology in agriculture.

iii. To help stabilize farm incomes, particularly in disaster years.

13. What are the crops covered under NAIS?

a. Food crops (cereals, millets & pulses)

b. Oilseeds,

c. Sugar cane, Cotton & potato.

14. Who are the farmers to be covered under RKBY?

All farmers including share croppers, tenant farmers growing the notifiedcrops in the notified areas are eligible for coverage. The scheme covers thefollowing groups of farmers:

a) On a compulsory basis: All farmers growing notified crops and availingseasonal agricultural operation (SAO) loans from financial institutionsi.e. Loanee farmers

b) On a voluntary basis: All other farmers growing the notified crops i.e.Non-loanee farmers, who opt for the scheme.

15. What is the sum insured/Limit of coverage?

The Sum Insured (SI) may extend to the value of the threshold yield of theinsured crop at the option of the insured farmers. However, a farmer mayalso insure his crop beyond value of threshold yield level upto 150% of

average yield of notified area on payment of premium at commercial rates.In case of loanee farmers the SI would be at least equal to the amount of crop loan advanced.

16. What are the premium rates?

S.No Season Crops Premium Rate

1. Kharif Bajra & Oil Seeds 3.5% of SI or actuarial rate whichever



is less.

Other Crops 2.5% of SI or actuarial

(cereals, millets Rate whichever is less

& Pulses)

2. Rabi Wheat 1.5% of SI or Actuarial rate, whichever

is less

Other crops 2.0 % of SI or Actuarial

(cereals, millets, rate whichever is less.

Pulses & oilseeds)

3. Kharif & Annual Actuarial rates

Rabi Commercial/annual

Horticultural crops

17. What is the subsidy on premium available?

30% of the premium is allowed in respect of Small & marginal farmers to beshared equally by the Government of India and State/UT governments. Thepremium subsidy will be phased out in a period of three years subject toreview of financial results and the response of farmers at the end of the firstyear of the implementation of the scheme.

18. What are the levels of indemnity?

Three levels of indemnity, viz. 90%, 80% & 60% corresponding to Low risk,Medium risk, & High risk areas shall be available for all crops based on the

coefficient to variation (C.V) in yield of past 10 years data. However, thefarmers of unit area may opt for higher level of indemnity on payment of additional premium based on actuarial basis.

19. What is threshold yield?

The threshold yield or guaranteed yield for a crop in an Insurance Unit shallbe the moving average based on past three years average yield in case of Rice & wheat and five years average yield in case of other crops, multipliedby the level of indemnity.

INDEMNITY: shall be calculated as per the following formula.

(Shortfall in yield/Threshold) X Sum Insured

Shortfall in yield = (Threshold yield – Actual yield for the defined area.)

20. Write a brief note on SGSY?

Swarnajayanthi Gram Swarojgar Yojana (SGSY) was introduced as acomprehensive Poverty alleviation programme w.e.f 1.4.1999. This



replaces six schemes viz., IRDP, TRYSEM, DWCRA, SITRA, GKY, MWS.Families living below the poverty line (BPL) will be considered for assistance.(the range of poverty lines of various states of India as per theixth Five Year Plan is Rs.13000/ to Rs.19650/- p.a). It is expected that theswarojgaris (beneficiaries) will earn a monthly income of Rs.2000/- in three

years.

21. What are the reservations provided under the scheme?

What is the amount of subsidy available?

S.C/STs 50%, Women 40%, Disabled/handicapped …3%

Subsidy:50%subject to a maximum of Rs.10,000/- in respect of SC/STs,

Subsidy :30% subject to a maximum of Rs.7,500/- in respect of others.

Subsidy :50% subject to a maximum of Rs.1.25 lacs in respect of SHGs.

22. Who is Prof. Mohammed Younus?

Prof. Mohammed Younus of Bangladesh experimented the concept of SHGs in 1975-76 and found that the concept is well taken by the peoplebelow the poverty line.

23. What are the four phases involved in the promotion stage of theSHGs?

a. Forming b. Storming c. Norming d. Performing

24. What is the amount of NABARD refinance available?

100% refinance is available to Banks financing SHGs.

25. What securities are to be obtained for the loans sanctioned to SHGs?

The advances made directly to the SHGs are to be treated as clean andtherefore no collateral security should be obtained. Group savings shouldnot be taken as collateral security.

26. What is produce marketing loan?

Under the scheme a maximum advance of Rs.10.00 lac (75% of the valueof the produce) can be granted to a farmer against the pledge or

hypothecation of produce, including warehousing receipt. The advance canbe granted for a maximum period of 12 months. The farmer should haveavailed crop loan from the branch. It is treated as a direct advance. Thecrop loan should be adjusted first from the produce marketing loan.

27. Write a brief note on Kisaan Credit Cards (K.C.C) ?



This scheme will be implemented in all the branches. The salient features of the scheme are as under:

a. Eligibility : -All Agricultural Crop loan borrowers

b. Pass book :-Kisaan Credit Card – cum – pass book will be issued.

c. Nature of facility:-Revolving Cash Credit limit valid for 3 years.

d. Number of withdrawals: Any number of withdrawals and repayments;withdrawals within the limit.

e. Accounted for under:- Agricultural Cash Credit

f. Credit limit (Under the K.C.C):-

Fixed on the basis of land-holdings, crops grown and relevant scalesof finance. Also the entire credit requirements of the farmer for agricultural production and ancillary activities related to the same suchas maintenance of agricultural machinery / equipment, electricitycharges etc. To some extent farmers’ contingent needs are also to betaken care of to the extent of 20% of the limit, subject to a maximum

of Rs.10000/-.g. Drawal of funds:-Cash Withdrawal will be made through withdrawal

slips accompanied by Kisaan Credit Card Passbooks (No chequebook need to be issued)

h. Security, documents, margin and discretion:-Same as applicable toagricultural advances.

28. What is the margin stipulated for crop loans?

In respect of loans upto Rs. 25.000/- no margin is stipulated. In respect of others 15 to 25% margin is stipulated

29. Describe how limits are fixed in crop loans?

The crop loans are need based finance. The cost of cultivation of each cropdetermined by the District Technical Committee should be adopted for fixing the limit.

30. What is an Agricultural Term Loan?

It is an investment credit provided for creation of a “Capital Asset” which iscapable of generating economic benefits during its economic life.

31. What is incremental income?

Incremental income means the additional income as a result of implementation of a development scheme.

32. What are the six categories of Agricultural Term Loans?

I. On–farm development, (Land development, Irrigation)

II. Farm- Power/mechanisation/equipment,



(Tractors, power tillers, farm equipment)

III. Horticulture/Plantation/Forestry,(Mango,Coffee,coconut,eucalyptus)

IV. Diversified/allied activities.

(Dairy,poultry,Sheep/goat rearing, sericulture)

V. Marketing & Storage (Construction of godowns, ware-houses, cold-storages)

VI. Miscellaneous (Bio-gas, Water-shed development, transport vehicles,conversions)

33. What is irrigation?

Irrigation is an artificial application of water for crop production. Intensivecultivation is possible with assured irrigation.

34. How is irrigation projects classified?

The classification of irrigation projects is based on the area under thecommand of the irrigation source. The classification is as under

Project Source of water Area benefited

Major Surface water More than 10,000 ha

Medium Surface water More than 2,000 ha

&. Upto 10,000 ha

Minor a. Surface water Upto 2,000 ha

b. Ground water Upto 2,000 ha

35. What are the stipulations for different areas based on ground water

availability? A. White Area: Where discharge or exploitation of water is less than 65%

of recoverable recharge

B. Grey Area: Where discharge is in between 65% & 85% of recoverablerecharge.

C. Dark Area: Where discharge or exploitation is more than 85% of recoverable recharge.

36. What is the eligibility criteria for tractor financing?

A. The farmer (s) should own at least 4 acres of perennially irrigated

land or corresponding acreage of dry land capable of yieldingadequate surplus.

B. The farmer should be in a position to use the tractor for 600 hrs a year on his own farm lands and for custom hiring.

C. 50% of repayment obligation (Instalment + Interest) should come byway of incremental income from farmer’s own fields.



37. What is the maximum period allowed for repayment of tractor loan?

The tractor loan is to be repaid in nine years in half-yearly instalments.

38. Give the names of a few breeds of dairy animals for bank financing?

Cows : Jersey, Holstein Friesian, Ongole

Buffaloes : Graded Murrah

39. What is the maximum period for repayment of dairy loan?

The period of repayment should not exceed six years.

40. Poultry finance Includes/

a. Commercial egg production.

b. Commercial broiler production.

c. Poultry feed manufacturing.

d. Hatchery.

41. What are the two systems of rearing?

There are two common types

I) Deep-litter system II) Cage system.

42. What is a broiler variety?

These birds are for table purpose. The birds attain an average weight of 1.50 Kgs in eight weeks time.

43. How many eggs a layer is expected to lay? A layer bird lays 280 - 300 eggs in 72 weeks period.

44. What is the repayment period prescribed for poultry loans?

After one year of gestation, the term loan instalments should be repaid in 72monthly instalments.

45. What is sericulture?

Sericulture refers to cultivation of mulberry and rearing of silk worms whichare the larvae of silk moth.

46. What is silk production cycle?

Silk production cycle known as sericulture includes four distinct activitiesbut at the same time they are inter related and form part of the oneactivity of getting finished silks.

1. Mulberry cultivation.

2. Silk-Worm rearing from larva to cocoon



3. Silk reeling which transforms cocoons into continuous filament calledraw silk.

4. Silk weaving in which silk filaments are twisted and woven into silkyarn.

47. What is apiculture?

Apiculture or bee keeping is rearing of honeybees in man made hives for the purpose of pollination and obtention of honey. The other productsobtained from this activity are bee-wax, royal jelly, propolis, apitoxinetc…The place where bee keeping is practised on commercial scale iscalled ‘Apiary’.

48. What are the categories in ‘High-tech Agriculture’?

‘High-tech Agricultural Projects are broadly classified into three categories:

i. Bio-tech projects,

ii. Hi-tech agricultural production projects,

iii. Post harvest and processing projects.

49. What are Bio-tech projects?

a. Tissue culture, b. Floriculture c. Hybrid seeds

d. Apiculture e. Food processing f. Animal vaccines

g. Acquaculture, h. Bio-mass utilization, i. Industrial enzymes

j. New bio-products.

50. What are Hi-tech agricultural production projects?

i. Drip and sprinkler irrigation

ii. Controlled environment agri. Production

iii. Hydroponics

iv. Un-conventional agricultural products

51. What are post harvest & processing projects?

A. Cold storages

B. Marine Food Processing

C. Meat/poultry processing unitsD. Manufacture of malted food

E. Manufacture of resins.

F. Improved packaging.

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Agricultural Banking - Questions & Answers