Credit policy

Interest Subsidy loans

The Karnataka State Cooperative Apex Bank has played a crucial role in the development of agricultural credit structure in the State of Karnataka and the principal function of the bank is to serve the farmers in the state by providing agricultural loans to the farmers through its network of District Central Cooperative Banks and its branches at the district level and Primary Agricultural Cooperative Societies at village level. 

With a view to extend substantial relief to the farmers by reducing the heavy interest burden on agricultural loans, the Govt. of Karnataka (GO No.CO/41/CLS/2006 dt.15.5.2.006) announced a scheme for providing financial assistance to Agricultural Cooperative Credit Institutions  for the year 2006-07 to enable them to lend agricultural loans to farmers at 4% .

• The scheme covers all agricultural loans - Short term (ST), Medium Term (MT), Long Term  (LT) loans and is not applicable to Non farm sector loans. 

• The lending rate to the farmer is 4% up to 2008 and revised to 3 % from 2009

• This benefit is available to agricultural loans upto Rs.3.00 lakhs per farmer

• The Govt. of Karnataka would provide interest subsidy to the cooperative institutions  on the agricultural (ST, MT, LT) loans sanctioned with effect from 1.4.2006 as follows:

Scale of Finance

Sl.No.	Crop	Recommended scale of finance for 2006-07 by SLTC (Rs. per acre)
1.	Bengal gram (Rain fed)	Rs.   3850=00

 Kisan Credit Card (KCC)

• The credit extended under the KCC scheme would be in the nature of a revolving cash credit and provide for any number of drawals and repayments within the limit. Such an approach would provide the much needed flexibility to the farmer in choosing the appropriate time to repay his loan and reduce the interest burden besides being in a position to draw on the card to meet his urgent credit requirements.
• Implemented by commercial banks, RRBs and coop Banks
• The credit limit under the card may be fixed on the basis of the operational land holding, cropping pattern and scales of finance.
• For fixation of credit card limits, operational landholdings will include the leased in land and exclude leased out lands.
• The credit card should normally be valid for 3 years subject to an annual review.
• The review may result in continuation of the facility, enhancement of the limit or cancellation of the limit/withdrawal of the facility, depending upon the performance of the borrower.
• As a measure of incentive for card holders with good performance the bank may, at the time of review, enhance the credit limit suitably to take care of increases in cost of inputs / labour, change in cropping pattern etc.
• Banks may apply the same rates of interest as are applicable to crop loans.