HO:LOANS:CIR:NO:3/2005                                                                                            DATED:24.10.2005

TO ALL OFFICES 

SCHEME FOR FINANCING UNDER PGB KRISHI CARD

(KISAN CREDIT CARD)

Details of Krishi Card Scheme were circulated to all the branches vide various circulars issued from time to time. 

Consequent upon the amalgamation of the 3 RRBs sponsored by PNB in Punjab into one entity and in order to obviate cross references to different loan circulars by Incumbents Incharge, we have consolidated guidelines on scheme for financing under PGB krishi card (Kisan Credit Card) as per encoled Annexures. 

Incumbents Incharge of branches are advised to go through the features of the Scheme and make use of the relaxations given for boosting direct agriculture finance.

CHAIRMAN

ANNEXURE 

(Annexure to Loans Circular No.3 dated 24.10.2005) 

SCHEME FOR FINANCING UNDER PGB KRISHI CARD

(KISAN CREDIT CARD)

1.          ELIGIBILITY 

Progressive literate and illiterate farmers who are owner cultivators, tenants, lessee or allottee farmers with recorded occupancy rights or farmers with ancestral/perpetual rights of cultivation.  Oral tenants can be eligible for loan only if land owners agree to become co-borrowers.  In the accounts which are secured by liquid securities like FDR, NSC/KVP, etc. the cards to oral tenants can be issued without stipulating the condition of land owners to be made co-borrowers.  Farmers should have stable financial position and a good banking habit.  In case of existing borrowers, track record of repayment is to be taken into account.   

Identification of the farmers will be done on the basis of photograph of borrowers alongwith signatures in case of literate borrowers and in case of illiterate borrowers, he shall be identified by his photo and thumb impressions.  He shall put his thumb impressions in the  presence of the Incumbent Incharge.  Literate farmers will put signatures and illiterate farmers will put thumb impressions on the card which will be authenticated by the Incumbent Incharge of the branch and the card will be laminated. 

2.          PURPOSE OF THE LIMIT 

a)     Purpose of the loan would cover short term working capital for agriculture activities, other domestic requirements such as education, consumable items, medical expenses, etc. term credit needs of the farmers and credit against  debt from non-institutional lenders.  For consumption needs, loan may be sanctioned upto 25% of the limit or Rs.50000/-, whichever is lower.  Similarly, for granting relief against indebtedness due to borrowings from non institutional lenders additional limit upto 25% of the total eligible limit (including production/ consumption loan) under KCC Scheme or Rs.50000/-, whichever is lower, may be provided. 

b)    Borrowers can avail limits either under PGB Krishi Card Scheme or Crop Loan or Composite Cash Credit Scheme.  But borrower can avail limit under only one of the three schemes. 

3.          EXTENT OF LIMIT 

Maximum Rs.10 lacs 

4.          FIXATION OF LIMIT 

Limit may be fixed for term loan and working capital requirement limit for agricultural and allied activities, etc. based on the unit cost of the asset/s proposed to be acquired by the farmer, the allied activities already being undertaken on the farm, the Incumbents’ judgement on his repaying capacity vis-à-vis total loan burden devolving on the farmer, including his existing loan obligations. 

While sanctioning the limit under such cases, the Incumbent Incharge will have to certify the approved unit cost for activities mentioned in each and every proposal.  A copy of the approved Unit Cost should also be kept on bank’s record. 

Further, Incumbents Incharge may disburse credit in accordance with actual costs involved in cases where farmers adopt scientific/advanced methods of cultivation using modern technology, hybrid seeds etc. 

The limit for the individual farmer may be worked out on the basis of total agriculture income stream of the farmer.  To assess income from farm activities, extent of land holding, cropping pattern, acreage and average yield of each crop grown, price realization etc. are to be examined.  For this purpose, the branch should obtain revenue records i.e. Fard Zamabandi & Khasra Girdawari of the farmer to verify the details noted therein.  The revenue records should not be older than 9 months.  Price realization may be ascertained by either the Government fixed minimum support price or local price, whichever is lower. 

The limit is to be fixed taking into account the total requirement of the farmer on annual basis for growing crops round the year as also the other production credit needs for allied agricultural activities such as dairy, poultry, etc. other domestic needs and investment needs of the farmers.  Total limit sanctioned to farmers should have a relationship with the projected net earning and the repaying capacity of the borrower. 

Maximum limit of Rs.10 lacs may be allowed as under : 

·        Maximum Rs.5 lacs for cash credit limit for crop production, consumption needs & working capital for allied activities. 

·        Need based term loan within overall ceiling of Rs.10 lacs including cash credit limit mentioned above & loan (maximum upto Rs.50000/-) for relief against indebtedness from non-institutional money-lenders. 

Since the limit is fixed by taking into account the requirement of the farmer on annual basis for all farm activities and there is no restriction on number of transactions in the cash credit account, the farmer can avail loan for the next crop before liquidation of the existing dues.  However, the farmer has to ensure that no drawal in the account remains outstanding for more than 12/18 months as the case may be. 

Safeguards: 

a)                 Payments against cash credit limit (for crop production, consumption needs & working capital for allied activities) beyond Rs.3,00,000/-  can be had  from card issuing branch only. 

b)                For the sake of simplicity, limit is to be fixed in multiples of Rs.1000/- and principle of round off of multiple fraction may be applied i.e., for less than Rs.500/- and more than Rs.500/- limit may be fixed on lower slab, and higher slab, respectively.  For practical purposes, minimum limit will be Rs.1000/-. 

c)                 The additional facility upto Rs.50000/- against indebtedness from non institutional money lenders may be provided to: 

i)       Existing farmer borrowers of the bank who have been regular in repaying bank loan with interest in the past except on occasions when they could not do so on account of factors beyond their control.

ii)     Non borrower farmers in the command area of the branch.

iii)   In respect of tenant farmers etc. we may adopt a group approach (SHGs, etc.) for granting relief against indebtedness to non-institutional lenders. 

d)                Charge in favour of bank would be created over assets and  documents pledged with the money lenders, if any, after the dues are cleared.  However this will form the part of security as per norms applicable for agriculture advances. 

e)                 Additional facility of maximum upto Rs.50000/- for clearing the old debts taken from non institutional money lenders may be sanctioned as one time measure repayable in 5 years. 

5.          AREA OF OPERATION 

The Scheme will be implemented by all branches. 

6.          RATE OF INTEREST 

a)     The rate of interest should be charged as per guidelines issued by Head Office from time to time.  Presently the rates of interest are as under : 

 b)    However, clubbing is required to be done for the purpose of rate of interest in case the amount exceeds Rs.2 lacs.  

c)     The interest on the debit balance will be calculated on daily product basis at half yearly rests following value dating system i.e. date of payment by paying branch is to be taken into account but it should not be debited to the borrower’s account.  Instead, it should be debited to a separate account, opened in Subsidiary General Ledger ‘Interest Accrued on Advances to Farmers’.  On the date fixed for repayment of the loan, interest due for the previous half-year or part thereof should be debited to borrower’s account by corresponding credit to the ‘Interest Accrued on Advances to Farmers’ Account’. 

d)    Payment of interest on credit balance in limit to farmers:

Branches may pay interest @ 3.5% per annum (as applicable to Saving Fund Deposits) on the minimum credit balance held from 10^th to the last day of each calendar month in the Cash Credit accounts under PGB Krishi Card Scheme.  Other guidelines and procedures as applicable to Saving Fund Accounts for calculation and payment of interest shall be followed. 

7.           SECURITY 

a)     For Cards issued upto Rs.50000/-

Hypothecation of crops/assets created out of bank loan. 

b)    For Cards issued above Rs.50000/-

i)       Hypothecation of crops/assets created out of bank loan. 

AND 

ii)     Charge on land as per Agricultural credit Operations and miscellaneous (Provisions) Act of the State/Mortgage of agricultural land valued at 150% of amount of loan for other farmers, 100% of the loan amount for small farmers/marginal farmers 

OR 

Alternate Security, viz. charge/lien over liquid securities such as term deposits/NSC/KVP, land and building situated outside village, etc., which may be considered adequate.

8.          LOAN DOCUMENTATION 

a)           Application for Agricultural Credit                              PNB 762®

b)           Annexure for each agricultural activity                            PNB763®         to                                                                                         PNB 784®

c)*          Copies of the revenue record .

d)      No due/default certificate from the other financial institutions especially the Primary Agricultural Credit Co-operative Societies providing crop loan in the area.  However, No Dues Certificate/Affidavit is not to be obtained for loans upto Rs.50000/-

e)       Non encumbrance certificate relating to agricultural land

f)          Hypothecation agreement                                 PNB 1041

g)       Deed of Guarantee                                                          PNB 1042

h)          Mortgage Deed                                                     PNB 1043

i)          Consideration voucher 

*        As mortgage of land as security for loans upto Rs.50000/- is not stipulated, copies of revenue extracts may not be insisted upon, and in lieu thereof, we may accept the following documents: 

a)                 Extract from the latest revenue/agricultural pass book issued by State Revenue Department.

b)                Receipt issued by the State Revenue/Irrigation Department for payment of land revenue or irrigation charges or any other document issued by the State Revenue Department containing details of ownership/cultivation rights, Kila/plot number, area of land and other requisite details.  Such receipt/document, however, should not be more than nine months old. 

In case a farmer is already availing crop loan/term loan from us and particulars of his/her land holdings with nature of rights are on bank’s record, local enquiries may be made to verify the present position and in case there is no adverse change, loan may be considered without asking for fresh copies of revenue records every time upto three years.

However, in order to further simplify the procedure and to boost lending under the KCC Scheme it has been decided that for limit upto Rs.25000/- a simple Application-cum-Verification report containing details of land duly countersigned by Revenue Officials, viz. Patwari/Naib Tehsildar/Tehsildar may be accepted in lieu of the copy of revenue record.  For limit above Rs.25000/- the existing guidelines remain the same. 

9.          ISSUE OF CARDS 

a)                 The branch Manager will mobilize the applications for PGB Krishi Cards.   After receipt of the applications the Branch Managers will appraise the applications and fix the credit limits for the individual farmer. 

The issue and disposal of the application under the Scheme will be entered in the PGB Krishi Card Application Received-cum-Disposal Register (PNB 1033) supplied by  Head Office.  Four different types of cards will be issued on the basis of credit limit sanctioned to the farmers viz. 

 b)                After fixation of the limit and completion of documentation formalities, the farmer will be issued a Krishi Card  valid for five years and also a Pass Book  for record of the limit and transactions.

 Pass Book may be divided into three parts as given hereunder: 

i)       Cash credit limit for production & consumption needs.

ii)     Cash credit limit for working capital requirement of allied agriculture activities.

iii)   Term loan repayable in 5 years including loan upto 25% of the total eligible limit (Term Loan/Production/Consumption Loan) under KCC scheme or Rs.50000/- which ever is lower for providing relief against indebtedness.

iv)  Similarly, on the Kisan Credit Card also three separate limits as mentioned above may be indicated.  However term loan will not be allowed as a revolving limit. 

c)                 The card will have the information like, photograph of the card holder, name of the card holder, name of the issuing branch, limit sanctioned to the farmer, signature/thumb impressions, as the case may be, of the farmer, signature alongwith General Branch Power of Attorney (GBPA) number of the Manager of the issuing branch, PGB KRISHI CARD NO. given by the card issuing branch, validity period of the card.

 d)                At the time of  issuance of pass book, the limit sanctioned for different activities will also be mentioned under full signatures of the Manager with the G.B.P.A. number in the pass book.

 10.          USAGE OF THE CARDS

 a)     Entire cash credit limit under the scheme may be disbursed in cash for which no bills/receipts may be obtained. 

b)    Investment Loan may be disbursed by making payment directly to the supplier/s on behalf of borrower/s.  Invoices/receipts should be obtained and kept on the bank’s record.  The Branch Officer may verify the end use of investment loan by conducting spot verification within a month from the date of disbursement of loan and the same be kept on bank’s record.  Entire term loan may be disbursed in stages, as per requirement of the borrower.  However, before release of next instalment, the end use of previous instlment shall be verified. 

11.          RENEWAL OF THE CARDS 

The card will be renewed at least one month before expiry of the current card on a simple hand written request from the card holder.  If the renewal is with the same limit, it may be renewed by issuing fresh card alongwith a sanction letter to the card holder.  If there is any variation in the existing limit, fresh documents are to be obtained. 

12.          LOANING POWERS 

Loans shall be sanctioned at various level in conformity with Loans circular No.2/2005 and subsequent instructions issued from time to time. 

13.          SERVICE CHARGES FOR ISSUE OF CARDS 

Service charges for issue of the cards as well as replacement of the card will be Rs.50/- irrespective of the size of the limit. 

However, processing charges are to be levied as per Loans Circulars issued from time to time in addition to the above service charges. 

14.          REPAYMENT 

1.       KCC Limit including Consumption Needs may be repayable in 12/18 months as the case may be and working capital limit for allied agriculture activities may be repayable in 12 months with following stipulations: 

a)     Aggregate credits into the account during 12 months period should at least be equal to the maximum outstanding in the account. 

b)    No drawal in the account should remain outstanding for more than 12 months.  However, this condition may be relaxed in cases where limit has been extended for growing long duration crops such as sugarcane, etc. or for agricultural activities where returns are expected after one year, but in no case any drawal in the account should remain outstanding for more than 18 months. 

2.       Term loan including loan for relief against indebtedness from non institutional lenders may be repayable in 5 years.  However, in case of term loan for tractor etc. where repayment period is more than 5 years, longer repayment period as prescribed under the respective scheme may be allowed. 

15.          MARGIN 

 *           Presently maximum limit of Rs.10 lacs may be sanctioned under the Scheme. 

For cash credit limit Borrower’s stake may not be insisted in cash.  Cost of family labour and inputs of the farmer may be treated as borrower’s stake.  However, for term loans margin may be maintained as stipulated above.  It may be noted that presently maximum limit of Rs.10 lacs may be sanctioned under the Scheme. 

16.          MONITORING IMPLEMENTATION OF THE SCHEME 

For the purpose of monitoring the scheme, every branch shall report on monthly basis the number of cards issued to the farmers and limit sanctioned to the Head Office before 5^th of the following month.  Recovery position there under shall be reported at half yearly interval i.e. June/December. 

17.          OTHER DETAILS OF THE SCHEME 

Other details of operation of the Scheme like procedure for numbering of the Credit Card, usage of the card, monitoring of the card issued, action to be taken for loss/stolen cards and/or pass books, precautions to be taken by the issuing Branch, renewal of cards and accounting procedure have been given in Appendix No.I.  Letter of undertaking to be obtained from the applicant alongwith the Application for Agricultural Credit i.e. PNB 762®.  Other guidelines issued by Head Office from time to time regarding production credit to farmers should also be complied with. 

18.          SECURITY ASPECTS OF PGB KRISHI CARD 

Requisition for supply of PGB  Cards may be made by the branches directly to the Head Office who will supply the same to the branches strictly as per procedure and guidelines observed in case of other security forms. 

All guidelines as contained in the Book of Instructions  on security forms be also observed for PGB Krishi Cards. 

The stock of Kisan Cards must be kept in the joint custody of two officials.

 Once a month, at irregular intervals, the Incumbent Incharge will check the entire stock of cards.  The Certificate appended in this regard, in the Security Forms Register and Manager’s Monthly Certificate (MMC) should not be signed as a matter of routine but only after conducting a thorough checking. 

Numbering and lamination of cards should be got done at Card Issuing Branch level only. 

19.          PROCEDURAL INSTRUCTIONS 

a)     Display at some conspicuous place in the branch, the salient features of KCC Scheme alongwith information regarding the requirements to be fulfilled for being eligible for KCC. Besides other features of KCC Scheme it should be specially mentioned that interest is paid by the bank on credit balance in the cash credit account at SF rate and KCC holders could deposit and withdraw any number of times within overall limit. 

b)    Applications complete in all respects may be promptly accepted and disposed of expeditiously.

c)     Opening of Saving Bank Account may not be made precondition for issue of KCC. 

d)    Head Office guidelines for charging rate of interest on agriculture advances should be strictly adhered to.  Interest on current dues should not be compounded. 

e)     Branch Managers to send confirmation regarding compliance of the above guidelines to Head Office on quarterly basis. 

f)      Branch Managers should ensure that Salient features of KCC scheme and the requirements to be fulfilled for availing KCC facility are displayed properly. 

g)     The Internal Inspectors of the Bank during inspection of the branches may comment on implementation of the above guidelines. 

Guidelines for financing under PGB Krishi Card – Master policy on Personal Accident Insurance Scheme (PAIS) for KCC holders  have been consolidated and are placed at appendix-V.  It should be ensured that all the KCC holders are covered under the PAIS.

APPENDIX - I 

PGB KRISHI CARD SCHEME 

OPERATIONAL GUIDELINES 

1.     Opening of accounts 

a)    Cards will be issued only after completion of documents.  With the issuance of KRISHI CARD,  cash credit account/term loan account will be opened in the name of the card holder for recording transactions under Krishi Card.  Sanction letter will be issued after allotment of number and lamination of the card and handed over to the farmer alongwith the credit card and pass book under receipt. 

b)    The Krishi Card and the Pass Book issued to a farmer shall bear the same serial number. 

c)     The cards will be supplied to the branches by Head Office on receipt of requisition as is done in case of other security forms for which the branches will have to follow the standard laid down procedures and guidelines.  Blank Pass Books are not security items.   

d)    Opening of Account in joint names under PGB Krishi Card Scheme has also been allowed by competent authority. In this regard, branches are required to obtain mandate from the other co-obligants to issue the PGB Krishi Card in the name of one of the Co-obligants  and to authorise him to operate the account on their behalf. Mandate shall be signed by the other co-obligants to authorize single person to operate the account. 

Further, it is informed that at Page 2 of the Hypothecation Agreement amendment is to be made in column (a) by incorporating the name of the scheme.  The amended column (a) is given as under : 

(a) Cash credit at any time upto limit of Rs.____________________ (Rupees_________________ only) under PGB Krishi Card Scheme/Composite Cash Credit Limit. 

It is pertinent to obtain signatures of the farmers on the left hand side margin where the name of the scheme is added by hand.

 2.     Procedure for Numbering of the Credit Card

 a)    In addition to the serial number printed on the card at Head Office level, each credit card will be given a number.  The number will consist of three parts.  The first part will indicate branch code number. The one syllable second part will indicate the type of the Card. The third part will indicate the running serial number of the credit card for the issuing branch.  Each part will be separated from other by a front slash.

                      /                    /                     /

                      /                    /                     /

          ………………………………………………………..

                  Branch         Type of the      Running serial

                   Code                Card               Number

b)    PGB Krishi Card will be supplied to the branches by Head Office.  On sanction, the card issuing branch will fill up the complete information in the card including its number, get it laminated (to make it tamper proof) and put it in plastic jacket before delivering to the farmers. 

3.     Usage of the Card 

a)     The card holder will be free to draw eligible amount of cash for round sum of Rs.1000/- or multiples thereof within his available cash credit limit from the issuing branch.  At the time of cash withdrawal, the card holder will present his card alongwith the pass book.  Both the items have to be presented together for a valid trasaction to take place. 

b)    The issuing branch will make payment directly debiting the cash credit account of the farmer. 

c)     The paying and the card issuing branch will enter the drawn amount in the pass book and cast the resultant debit balance in the balance column under full signature with P.A. number of paying branch manager. 

4.   Action to be taken for loss/stolen cards and/or Pass Books 

a)    In case of card and/or pass book being lost or stolen, the card holder shall notify/inform by quickest means to the card issuing branch. 

b)    The issuing branch shall replace/re-issue a fresh card with a new number against indemnity bond signed by the card holder for issuing of duplicate card.  When a duplicate card is issued, it should be prominently marked in red ink “Duplicate of Krishi Card No.____” and its issuance should also be noted against its original entry.  Same procedure may be followed in case of loss of pass book which has been issued in lieu of the original pass book. 

c)     Charges for replacement/re-issue has been fixed at Rs.50/- per card per reference.  Suitable precautions should be taken for duplicate issue of card against lost/stolen cards/pass books. 

d)    Pass book is the supplementary document of a card and printed numbers are not marked on it.  However, for the sake of convenience and simplicity, space has been provided to write card number on the pass book also. 

5.   Precautions to be taken 

a)     Movement of all the applications must be recorded in the Application Receipt-cum-Disposal Register, as stated above.

b)    All the entries in the pass book must carry full signatures alongwith P.A. number and the entries & signatures should be properly covered with cellophane tape.

c)     On being approached by the card holder for payment, the  branch will check issuance and validity of the card.

d)    Examine the signature of the card issuing signatory on the basis of the P.A. number.

e)     Prepare the payment voucher and process it for payment

f)      Before making payment, the card holder will be identified on the basis of the photograph as given on the card and signature on the card be tallied with that on the payment slip and the payment voucher.

g)     The drawals be allowed only when the pass book is presented alongwith the krishi Card subject to the availability of the credit limit.  The availability of the credit limit will be decided on the basis of the entries in the pass book.

h)     The drawals will be entered in the pass book and after each withdrawal and resultant debit balance will be cast in the balance column under full signature authentication with P.A. number of the paying branch manager.

i)       The drawal entry made in the pass book must be protected by sticking cellophone tape. 

6.   Accounting Procedure

          1.At Paying Branch (Other than card issuing branch):

a)     At the time of paying cash

Dr.Suspense Account –PGB Krishi Card

Cr. Cash (paid to Card holder)

b)    On receipt of Credit Advice from Card issuing branch:

Dr. Head Office A/c ( Card issuing Branch)

(E.O. …….. (date) responded.

Cr.Suspense Account –PGB Krishi Card

(E.O…….(date) adjusted

 On receipt of 1^st copy of charge slip from paying branch, the card issuing branch will pass the following entry in their books

                     Dr.Card holder’s Agri. Cash Credit A/c

                    Cr. Head Office A/c…….(paying branch)

 II.Card Issuing Branch:

           (Where the card is presented for cash payment at card issuing branch)

           a)          Dr.Card holder’s Agriculture Cash Credit A/C

                    Cr.Cash

 b) At the time of deposit/repayment of dues by the card holder

Dr.                  Cash

Cr.                  Card holder’s Agriculture Cash Credit A/C

 (Necessary entry to be made in card holder’s Pass Book so that limit may be restored to the extent repaid). 

FOR ISSUANCE  OF NEW CARD

           Dr.                    Cash

          Cr.                    Commission A/C PGB Krishi Card

 7.          Balancing of Books

 The periodicity of balancing of Cash Credit A/Cs financed under PGB Krishi Card Scheme should be similar to that of Cash Credit A/Cs financed under Crop Loan Scheme, i.e. balances of Krishi Card A/Cs may be cast and tallied on quarterly basis, subject to the following: 

a)     Separate ledger shall be maintained for Krishi Card Accounts

b)    Separate progressive Balance Book will be maintained for such accounts which shall be balanced with General Ledger on Weekly basis, as laid down.

c)     Every week, balances of Cash Credit (Conventional) should be taken down and together with progressive balances of Cash Credit Crop Loan Accounts and Krishi Card Accounts, figures should  tally with the balance as per General Ledger.