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 than homestead and deriving more than 50% of his income from agricultural wages as labourers. d. Non-agriculture/ Rural artisans: Residents of the villages 50% of whose income is derived from non-agricultural sources

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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. What are the functions of NABARD? The functions of NABARD are broadly classified into three as given hereunder: a) CREDIT: (I) It provides short term credit to SCBs, RRBs, and AFIs(15months), (II)Medium Term loans to SCBs, RRBs, SLDBs and AFIs (18months to 7 years) (III) Long Term credit to SCBs, SLDBs, RRBs, commercial Banks, 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 Regulatory: i) Inspection of Co-operative banks and RRBs,

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ii) Permission for opening of new branches of cooperative banks and RRBs. 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 takenup by Banks for development. The eligibility for drawing refinance is linked to recovery performance of the Branch. Category A: Recovery 60% and above Unrestricted Refinance. Category B: Recovery below 60% restricted refinance. 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 and can be used as a manure. What are the various stages involved in the preparation of Dist. Credit Plan? Branches prepare their credit plans for the forthcoming financial year based on the village credit plans. The branch credit plans are consolidated into Block Credit plans. The lead Bank of the district would consolidate the Block plans into Annual Credit plan of the district. What is the bench-mark to be achieved under Agri. Advances? Banks have to lend 18% of the Net Bank Credit to agriculture segment. Out of this, advances under direct agriculture should be 13.5% and the balance of 4.5% may be under indirect advances. What is a crop loan? It is a production credit sanctioned for taking-up seasonal agricultural operations. What is a subsistence farming? Subsistence farming arises when the land holding is very low and the surplus generated from the farm operations is so meagre that while it may cover the cost of cultivation it may not be adequate to meet the farmers family expenses.

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10. What are scales of finance for crop loans?

The District Technical Committee / State Level Bankers Committee will decide the amount of loan to be financed for each crop grown in the State. 11. What is NAIS? National Agricultural Insurance Scheme (NAIS) Insurance scheme introduced by the Govt. of India.

is the revised Crop

12. What are the objective of the NAIS? i. To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crops as a result of natural calamity, pest & diseases. ii. To encourage the farmers to adopt progressive farming practices, high value 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 notified crops in the notified areas are eligible for coverage. The scheme covers the following groups of farmers: a) On a compulsory basis: All farmers growing notified crops and availing seasonal agricultural operation (SAO) loans from financial institutions i.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 the insured crop at the option of the insured farmers. However, a farmer may also 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 1. Kharif Bajra & Oil Seeds

Premium Rate 3.5% of SI or actuarial rate whichever

Other Crops (cereals, millets & Pulses) 2. Rabi Wheat

is less. 2.5% of SI or actuarial Rate whichever is less

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Other crops (cereals, millets, Pulses & oilseeds) Kharif & Annual Rabi Commercial/annual Horticultural crops

1.5% of SI or Actuarial rate, whichever is less 2.0 % of SI or Actuarial rate whichever is less. Actuarial rates

17. What is the subsidy on premium available? 30% of the premium is allowed in respect of Small & marginal farmers to be shared equally by the Government of India and State/UT governments. The premium subsidy will be phased out in a period of three years subject to review of financial results and the response of farmers at the end of the first year 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, the farmers 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 shall be 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, multiplied by 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 a comprehensive 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 the ixth Five Year Plan is Rs.13000/ to Rs.19650/- p.a). It is expected that the swarojgaris (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 people below the poverty line. 23. What are the four phases involved in the promotion stage of the SHGs? 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 and therefore no collateral security should be obtained. Group savings should not 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 value of the produce) can be granted to a farmer against the pledge or hypothecation of produce, including warehousing receipt. The advance can be granted for a maximum period of 12 months. The farmer should have availed crop loan from the branch. It is treated as a direct advance. The crop 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 scales of finance. Also the entire credit requirements of the farmer for agricultural production and ancillary activities related to the same such as maintenance of agricultural machinery / equipment, electricity charges etc. To some extent farmers contingent needs are also to be taken 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 cheque book need to be issued) h. Security, documents, margin and discretion:-Same as applicable to agricultural 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 crop determined 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 is capable 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. Onfarm development, (Land development, Irrigation) II. Farm- Power/mechanisation/equipment,

III. IV. V. VI.

(Tractors, power tillers, farm equipment) Horticulture/Plantation/Forestry,(Mango,Coffee,coconut,eucalyptus) Diversified/allied activities. (Dairy,poultry,Sheep/goat rearing, sericulture) Marketing & Storage (Construction of godowns, ware-houses, coldstorages) Miscellaneous (Bio-gas, Water-shed development, transport vehicles, conversions)

33. What is irrigation? Irrigation is an artificial application of water for crop production. Intensive cultivation is possible with assured irrigation. 34. How is irrigation projects classified? The classification of irrigation projects is based on the area under the command of the irrigation source. The classification is as under Project Major Medium Minor Source of water Surface water Surface water a. Surface water b. Ground water Area benefited More than 10,000 ha More than 2,000 ha &. Upto 10,000 ha Upto 2,000 ha 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 recoverable recharge. 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 yielding adequate 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 by way of incremental income from farmers 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 72 monthly instalments. 45. What is sericulture? Sericulture refers to cultivation of mulberry and rearing of silk worms which are the larvae of silk moth. 46. What is silk production cycle? Silk production cycle known as sericulture includes four distinct activities but at the same time they are inter related and form part of the one activity of getting finished silks. 1. Mulberry cultivation. 2. Silk-Worm rearing from larva to cocoon

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Silk reeling which transforms cocoons into continuous filament called raw silk. Silk weaving in which silk filaments are twisted and woven into silk yarn.

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 products obtained from this activity are bee-wax, royal jelly, propolis, apitoxin etcThe place where bee keeping is practised on commercial scale is called 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 units D. Manufacture of malted food E. Manufacture of resins. F. Improved packaging.