News

Indian farmers gain ATM card access to loan funds

March 20, 2012

India's central government will convert the current Kisan credit card used to provide affordable credit to small farmers into a smart card that can be used at ATMs, said a news article at timesofindia.com. The move is being praised by bankers and farmers as an improvement over the previous system in which farmers often cashed out their entire loan amount at once to avoid frequent bank visits and would often use the cash for non-farm related expenses.

Farmers also are pleased that having the ATM card means they no longer need to take large amounts of cash with them when they go to agriculture fairs in big cities. "You generally don't carry much money to such places," said Swapnil Dhote, an engineer with an MBA degree who now farms for a living. "But with the card we can buy new equipment, seeds or fertilizers."

Another farmer, Narendra Dhakore also liked the new ATM card scheme. He said that with the lump sum withdrawals, farmers would only utilize 25 percent of their loan for agriculture and spend the rest on personal expenses, "but now it would be utilized better than ever before."

Suhas Ghugal, zonal manager of credit for Bank of India said the ATM card would encourage farmers to withdraw funds only when they need them for farming expenses. "I feel farmers will benefit from the scheme as they will save on the time spent in banks, or the risk of withdrawing the amount in one installment," he said.

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