Government plans Aadhaar-based tech way to simplify farm loans

Karnataka is working on an Aadhaar-based system to help farmers get bank loans quicker, while at the same time making sure they do not borrow multiple times by pledging the same piece of land.

The Agriculture department has proposed integration of software that will give banks full access to the farmers’ land records, based on which credit decisions can be made. This will not only prevent farmers from running pillar-to-post and submit multiple documents, but also inform banks of any existing encumbrances.

Farmers depend on credit. In the 2019-20 fiscal, banks in the state disbursed agricultural loans worth Rs 91,537 crore.

But getting a bank loan can be quite tedious for a farmer, Agriculture Commissioner Brijesh Kumar Dikshit said. “If you are applying for a loan, the bank needs to know if the land belongs to you. Then, if there is already some outstanding loan on it. Lastly, it needs address verification. The farmer needs to submit all this and also get a letter from other banks in the vicinity saying there are no outstanding loans,” he said.

“What we’ve proposed is that the farmer should give just his Aadhaar, with which the bank can access details such as address, identity and land ownership,” Dikshit said. “The bank need not ask for any documents.”

Banks will be given login access on the K-KISAN portal where a farmer’s Aadhaar can be entered to view address and land details. Banks can also download a farmer’s record of rights, tenancy and crops (RTC) that will contain encumbrances.

As part of this, banks can see the Farmer Registration & Unified Beneficiary Information System (FRUITS) ID of a farmer once a loan account number is entered. Since the FRUITS ID is unique to a farmer and is linked with Aadhaar, multiple borrowings can be avoided. “What farmers do is, they take their land to get a loan from a district cooperative central bank and the same land will be used to get a loan from a commercial bank,” Dikshit said.

This will require integration of the K-KISAN portal with the core banking system (CBS) of the banks. The Agriculture department is talking to banks about this. “I want to show people at the loan sanctioning level that it’s simple. If this comes through, the only document a farmer will have to provide is the Kisan Credit Card (KCC) application,” Dikshit said. “This will empower farmers.”