Private sector lender Federal Bank in association with Reserve Bank Innovation Hub and the State government announced a pilot project for the end-to-end digitalisation of Kisan Credit Card products in select districts of Tamil Nadu.
As per the plan, small and marginal farmers would be extended term or crop loan of up to ₹1.60 lakh without any collateral. On Monday, a few farmers were sanctioned loans of up to ₹1.30 lakh in Chennai, Madurai and Hosur.
“This project now opens up possibilities in making frictionless credit accessible to our farmers. Our aim is to provide frictionless credit to one billion customers,” Rajesh Bansal, CEO, Reserve Bank Innovation Hub, a subsidiary of RBI, said during the event.
“It took us nearly for four months to develop this programme. We have 174 branches in Tamil Nadu and our target audiences are 50 lakh farmers. In the next two-three weeks, we will be doing a massive awareness programme in Nilgiris,” said Shyam Srinivasan, MD & CEO, Federal Bank.
The digital loan, using eKYC and eSign, will be sanctioned to small and marginal farmers within five minutes against the conventional methods of three or four days. The scheme is open to both customers and non-customers of the bank, said K. Mohan, Senior Vice President, Country Head – Agri, Micro and Rural Banking.
According to him, the loan will attract 9% interest rate, but at the end it would come to about 4-6%, after deducting the interest subvention.
Union Bank of India today, also announced digitalisation of KCC lending process ‘Sambhav that was efficient and farmer friendly.
Calling it as a fintech initiative, the bank MD & CEO, A. Manimekhalai said that an applicant need not visit a branch or submit documents. Farmland verification will be done online.