New Delhi: If the numbers are to be believed, the farm loan scenario is putting up a disturbing trend. Though, the last three years have witnessed an increase in loan disbursement but the number of farmers who took a loan has declined sharply. In 2004-05, 41.3 million farmers took a loan, this number declined to 38.5 million and 39.7 in 2005-06 and 2006-07 respectively.

Contrary to the decline in number of farmers taking a loan, the total disbursement has been climbing up at a rapid rate. The loan disbursement to farmers have increased by 44 per cent to Rs 1,25,309 crore in 2004-05, by 44 per cent to Rs 1,80,486 crore in 2005-06 and by 13 per cent to Rs 2,03,297 crore in 2006-07. Loan disbursements stood at Rs 1,20,062 crore in April-October of 2007-08.

Baffled by this disturbing trend the National Bank for Agriculture and Rural Development (NABARD) has decided to conduct a study with Gokhale Institute of Politics and Economics, Xavier's Institute of Development Action and Studies and Indian Institute of Bank Management at the ground level. The purpose of the study will be to find out the reasons of this mismatch between the amount of credit disbursed and the number of farmers who take a loan.

Most of the bank are witnessing this mismatch but the co-operative banks have witnessed a relatively steep decline in farmer opting for loans. Experts believe that this could be due to the inherent weakness of the co-operative credit structure and a rise in the use of Kisan Credit Card (KCC).

Launched in 1998-99 by the Government of India in consultation with the Reserve Bank of India (RBI) and National Bank for Agricultural and Rural Development (NABARD), KCC was readily adopted by farmers and agriculturists in India. Reserve Bank of India states that there are more than 66.56 million Kisan Credit Cards in use across India

Acting as a composite loan facility KCC, which takes care of investment, production and consumption, could be one of the main reasons for this decline. A Kisan credit card once issued, remains valid for a period of 3 years and the credit limit attached with the KCC can vary according to financial health of the farmer.  The Kharif and Rabi, two main seasons for farming in India, were earlier financed under different loan accounts, however KCC has changed all this and they are now treated as one.