Impact of interest free crop loan scheme existing in cooperatives in Belagavi district

Abstract

In modern agriculture, short term/crop loan plays a major role in addressing farming needs. Since 2012-13,Government of Karnataka has been pursuing the policy of supplying crop loan of up to ` 3,00,000 to the farm operatorsat zero per cent interest through cooperatives to provide financial backing to farmers. In this context, the present studyanalyses the performance of interest free crop loan scheme existing in cooperatives in Belagavi district. The year wisesecondary data on the sources of funds, number of farmers applied for crop loan, loan amount demanded and advanced,recovery of crop loans were obtained from the Head office of District Central Cooperative Bank (DCCB), Belagavi and usedto analyse the progress before and after introduction of interest free crop loan scheme. The analytical tools used in the studywere Compound Annual Growth Rate and Descriptive statistics. The total funds of District Central Cooperative Bank,Belagavi exhibited annual growth rate of 13.66 per cent. The average annual share of agricultural loans was 49.78 per centin the total loans. The total agricultural advancesgrew at 14.73 per cent with short term loans showing a positive growth(15.04 %) and the medium term loans showing negative growth (17.11 %). The number of applications for crop loansincreased when the crop loan became interest free. Also, the average annual demand for crop loan increased from ` 47,842lakhs (2006-07 to 2011-12) to `1,13,573 lakhs (2012-13 to 2017-18).The proportion of demand for interest free loan,which was actually met, was as high as around 98 per cent per annum and loan recovery was about 99 per cent.