Farmers need crop loan for farming, but many times the question arises whether farmers are also given loans on the basis of CIBIL score? Recently this issue was raised by Shiv Sena MPs Sanjay Haribhau Jadhav and Omprakash Bhupal Singh in the budget session 2024-25 of the Lok Sabha. The question was whether farmers are being denied loans due to poor CIBIL score?
On this, the government clarified that banks do not look at CIBIL score very strictly while giving crop loans, especially in small loan cases up to Rs 3 lakh.
What did the government say?
In its reply, the government cited RBI’s 2014 circular and said that banks are definitely advised to look at the Credit Information Report (CIR). If the farmer has not repaid the previous loan on time or has been a defaulter, then his CIBIL score can be looked at at the time of loan approval. However, this is not a binding condition and banks have been advised to be flexible.
Major decisions taken by the government for farmers
No fee on crop loan up to Rs 3 lakh
On February 4, 2019, the Finance Ministry directed all banks not to charge processing, documentation and inspection fees on Kisan Credit Card (KCC) or crop loans up to Rs 3 lakh. RBI has issued a new circular on 6 December 2024 increasing the limit of unsecured agricultural loan from Rs 1.6 lakh to Rs 2 lakh.
Possibility of re-loan after one-time settlement
If the farmer has repaid his old loan or has done one-time settlement, then the bank may approve a new loan after some time as per their policy.
The experience of farmers
The experience of some farmers has been that even after repaying the loan, they had to face difficulties in getting a new loan. Experts believe that the reason for this could be the old default record or the strictness of banking processes. But the government has instructed the banks to adopt a liberal approach in the cases of farmers.
What to do if there is a problem with the loan?
If a farmer is facing problem in getting crop loan, he should contact the manager of the concerned bank branch and apply under Kisan Credit Card (KCC) Scheme.