In Kerala, borrowers were asked to convert agricultural loans into Kisan Credit Cards (KCC). The customers have been sent notice after the banks have completely stopped the approval of such loans. The banks sent the notice as the Central Government canceled the reduction in interest to agricultural gold loans that were approved after October 2019, reads the notice.
In Kerala, the corporative banks have a major share of total KCC accounts, i.e., 85 percent of them. According to Agricultural Minister V.S. Sunil Kumar, the scheduled banks are taking a dismissive approach towards this.
An individual needs to have at least half an acre of land in his/her name in order to get the loan of Rs 1 lakh through KCC. Earlier, farmers need to submit tax receipt for one cent of the land to avail agricultural gold loan. This implies that the majority of people who availed agriculture loans will not be eligible to get KCC. Thereby, instead of four percent interest specified earlier, the customers will now be paying nine percent interest for the loans.
It is estimated that eleven lakh people will face the repercussions of this decision. Out of 74 lakh agricultural loans approved, 45 lakh loans are estimated to be agricultural gold loans. So, how will the banks approve the loans? Those who are not able to convert the loans into KCC before March 31 will have to pay extra tax. The banks will also take into consideration factors like the nature of cultivation, the size of the land, etc.
