Karnataka launches tech-based pilot for crop loans

The technology will make borrowing simple for farmers and will enable the prevention of a borrower being lent twice for the same collateral property documents

The state government on Tuesday launched a pilot project under which two Canara Bank branches will use a new technology-based system to lend agricultural loans to farmers.

The initiative involves integrating the government’s Farmer Registration & Unified Beneficiary Information System (FRUITS) database with banks to disburse loans. This will make the loan process simple for farmers, while at the same time making sure they do not borrow multiple times by pledging the same piece of land.

The Nelamangala and Tavarekere branches of Canara Bank will pilot this new system. DH had reported that the government was planning this system in its July 17, 2020 edition.

The FRUITS database contains information on 72.48 lakh farmers, including their land details that banks can access. The bank will enter a farmer’s FRUITS ID to gain access to details based on which it can sanction the loan. Once that is done, the information is pushed to the Kaveri property registration and Bhoomi land records databases to create encumbrances.

“None of the farmers will have to physically go to a sub-registrar’s office to have their loans recorded,” Additional Chief Secretary (e-Governance) Rajeev Chawla said.

Using the FRUITS database for agricultural lending will help authorities find out for which crop the loan was taken and whether the farmer is actually growing that crop. This will also ensure easy coverage of borrowing farmers under crop insurance and bring more farmers under institutional finance.

This initiative, authorities said, will fill the gap that was created with the absence of a common database or unified IT system for agricultural lending. Each commercial bank and cooperative bank uses its own IT system, with some primary agricultural credit societies not having any technology at all. This prevented the detection of farmers availing multiple loans by mortgaging the same land with different banks or branches.

“By the end of January, we hope that all banks will be onboarded,” Canara Bank executive director A Manimekhalai said.