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Development and Promotional Functions

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Micro Finance in India
2009-10
Best Farmers' Club
Directory of Farmers
Club

Farmer's Club Programme

Reserve Bank of
India

Farmer's Club Programme Overview

Departments
Agriculture is the backbone of the Indian Economy as nearly 60% of the population
of the country depends on agriculture and it contributes 18% to the GDP. Tenth Five
Year Plan and National Agriculture Policy documents envisage a growth level of 4%
in Agriculture as against the average growth of less than 2% in the last 50 years.
The last decade commencing from 1990s was marked by post-Green Revolution
fatigue and plateauing yield levels in many parts of the country. For sustained 4%
growth in agriculture there is need to improve productivity and cut down on costs by
improving efficiency.
There is, therefore, an urgent need to provide package of initiatives for transfer of
technology, improving input use efficiency, promoting investments in agriculture
both in private and in public sectors and creating a favourable and enabling
economic environment. The emerging needs in agriculture sector now are adoption
of location specific skill and knowledge based technologies, promote greater value
addition to agriculture produce, forge new partnerships between public institutions,
technology users and the corporate sector, harness IT more effectively to realise
financial sustainability and compete in the international market.

Indian Bank's
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Model Bankable
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Department

For transmitting the latest agriculture techniques to the Farmers field, orienting
them to establish better relationship with banks, adoption of latest post-harvest
handling technology, value addition, etc. and enjoy the benefits of collective
bargaining power both for procuring inputs and select their produce the Farmers
Club Programme is an appropriate and most suitable strategy initiated by NABARD
in late 1982.
Mission
Development in rural areas through credit, technology transfer, awareness and
capacity building.
What is Farmers' Club Programme
National Bank for Agriculture and Rural Development (NABARD) encourages banks
to promote Farmers' Clubs in rural areas under the Farmers Club Programme,
earlier known as Vikas Volunteer Vahini (VVV) Programme. The Programme was
launched by NABARD in November 1982 to propagate the five principles of
Development through Credit.
The five principles are:
Credit must be used in accordance with the most suitable methods of
science and technology.
The terms and conditions of credit must be fully respected.
Work must be done with skill so as to increase production and productivity.
A part of the additional income created by credit must be saved.
Loan installments must be repaid in time and regularly so as to recycle
credit.
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The VVV Programme was rechristened as Farmers Club Programme in 2005

by revisiting its earlier mission.
What are Farmers' Clubs
Farmers Clubs are grassroot level informal forums of farmers. Such Clubs are
organised by rural branches of banks with the support and financial assistance of
NABARD for the mutual benefit of the banks concerned and the village farming
community/rural people. With the enhancement of the programme, other agencies
like NGO, VAs, KVKs, SAUs etc. are also now included as agencies included in the
formation and promotions of FCs.
Functions:
The broad functions of the Farmers Clubs as envisaged are as follows :
Coordinate with banks to ensure credit flow among its members and forge
better bank borrower relationship,
Organise minimum one meeting per month and depending upon the need,
there would be 2-3 meetings per month. Non-members can also be invited
to attend the meetings,
Interface with subject matter specialists in the various fields of agriculture
and allied activities etc., extension personnel of Agriculture Universities,
Development Departments and other related agencies for technical know
how upgradation. For guest lectures, even experienced farmers who are non
members from the village/ neighbouring villages could be invited,
Liaison with Corporate input suppliers to purchase bulk inputs on behalf of
members,
Organise/facilitate joint activities like value addition, processing, collective
purchase of inputs and farm produce marketing, etc.; for the benefit of
members. They can also sponsor / organise SHGs,
Undertake socio-economic developmental activities like community works,
education, health, environment and natural resource management etc.
Market rural produce and products
New & Emerging Role of Farmers Clubs:
The broad objective of setting up Farmers Clubs would be to achieve prosperity for
the farmers with overall agricultural development in its area of operation by
facilitating credit counselling, technology counselling and market counselling. Over
the years, the vision of Farmers Clubs has undergone a change and the role
expected to be played by Farmers Clubs have been enlarged to enable them to
facilitate transfer of technology, propagation of seed village concept, strengthen
agricultural extension services, undertake collective purchase and distribution of
inputs, production and marketing, capacity building of members, to act as Business
Facilitators (BFs)/Business Correspondents (BCs) for banks, formation of Self Help
Groups (SHGs), Joint Liability Groups (JLGs), Producers Groups/Companies,
Federations of Farmers Clubs, undertake community related works, and assume
the role of a leader.
NABARDs support to FCs:
NABARDs policy support for Farmers Club Programme lays stress on linking
technologies with farmers club members and also facilitating market access
through the following mechanism:
Capacity building of members of Farmers Clubs including leadership
training.
Linkage with technology/markets
Self Help Groups (SHGs)/Joint Liability Groups (JLGs) formation
Forming Federations of Farmers Clubs/Producers Groups/Companies
NABARDs support o Farmers Training & Rural Development Centres (FTRDCs):
NABARD supports recurring expenses of Farmers Training and Rural
Development Centres (FTRDCs) set up by institutional agencies. NABARD has set
up a Farmers Technology Transfer Fund (FTTF) to be used to facilitate transfer of
technologies and market linkages especially through Farmers Clubs besides
need based support for formation of Producers Groups/ Companies, Federations
of farmers Clubs etc.
Importance attached to FC Programme by Govt. of India:
All Regional Rural Banks have been directed by Union Finance Minister to have at
least one Farmers Clubs per branch. In view of the importance attached to the
programme by NABARD & GOI and also in the context of business advantages that
accrue to institutional agencies, banks may adopt the Farmers Club programme
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as their business strategy.

Benefits of Farmers' Club to Bank Branch
The formation of Farmers Club lead to better Banker-Borrower relationship in the
area. An Evaluation study of Farmers Club Programme (FCP) carried out by IIM,
Lucknow has brought out the following advantages of FCs to bank branches:
Increase in deposits.
Increase in the credit flow and diversification of lending.
Generation of new business avenues.
Increase in the recoveries and decline in the non-performing assets.
Reduction in the transaction costs of financial institutions/ Banks.
Socio economic development of the village.
A win-win situation both for the banker and borrower.
Besides these benefits to the banks, the Farmers Club has also been
instrumental in certain social welfare measures like free eye check-up
camp, Animal Health Care Camp, Mass vaccination camp, community
works like road, check-dams, afforestation, etc.
Enhancement in bargaining power for bulk purchase of inputs and
marketing of their produce.
Who can form Farmers' Clubs
All Institutional Agencies (Commercial Banks, Cooperative Banks and Regional
Rural Banks) and all grassroot level organisations (NGOs, PRIs, State Agricultural
Universities, KVKs, ATMA, Post Offices etc.) are eligible to form Farmers Clubs
Set Up
Farmers Club is an informal forum in the villages. It can be promoted in a village/
cluster of villages, generally in the Operational Area of a Bank. While Farmers Club
should have minimum of 10 members, no upper limit in the membership is
envisaged. Every Club would have three office bearers - One 'Chief
Coordinator/Volunteer/ President, the other 'Associate Coordinator/Volunteer/Vice
President. The office bearers would be elected by Club Members on a democratic
basis for a term to be decided by the Club. The office bearers should be residents
of the area of the operation of the club. No NGO/FC promoting agency
representative can be office bearer of the club.
Functions of the Office bearers:
The main functions of the office bearers would be to convene meetings, to arrange
meetings with experts, maintenance of Books of Accounts, coordination with Bank,
Line Departments of the State Governments, maintaining proper liaison with all
concerned.
Membership
All villagers except willful defaulters can become members of the club. The club
must make endeavour to raise their own resources by way of contribution from
members, undertaking certain business services such as bulk procurement of
inputs and collective marketing of agricultural produce, functioning as Business
Facilitators (BFs), agents for insurance and other services etc.
Steps in the formation of Farmers Clubs
Bank branch can promote the clubs directly or engage Farmers Club
promoting agencies like Krishi Vigyan Kendras (KVKs), Agriculture
Universities, NGOs, Corporates, etc.
All grassroot level organisations (NGOs, PRIs, State Agricultural
Universities, KVKs, ATMA, Post Offices etc.) are eligible to form Farmers
Clubs
Select a village/ cluster of villages suitable for launching Clubs in the
operational area of the bank branch.
Identify a few progressive farmers and borrowers with good track record of
proper loan utilisation, aptitude and capacity for team work. (Success of the
Club hinges on the right choice of members).
Encourage the members to select a Chief Coordinator/Volunteer/President
and an Associate Coordinator/Volunteer/Vice President and a Cashier. This
will ensure collective leadership and continuance of the Club.
Provide orientation training to them with the help of NABARD (Regional
Office / DDM or trained officers from the bank) before launching.
Encourage members to convene monthly meeting regularly, guide them to
have meaningful discussion and take necessary follow up action.
Motivate members them to identify credit and non-credit needs (training,
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socio-economic, village infrastructure, etc.), prepare a plan of action and

accordingly arrange for expert talks, counselling, need-based activities, etc.
with the help of Government Departments and other agencies concerned.
Ensure that the members maintain Membership Register, Meeting Register,
Minutes Book and Books of accounts .
Evolve a performance parameter and measure the Clubs contribution
annually.
Use Club as a tool in aid of branch not only in the matter of credit and
recovery but also in facilitating promotion of SHGs, micro credit, Financial
Inclusion and convergence of services.
Consent Letter:
NABARD provides financial support to FCs for an initial period of 3 years.
Sponsoring Banks/Agencies are expected to give a consent letter for supporting the
clubs for a period of two years beyond the initial period of 3 years of NABARD
assistance.
No. of Clubs to be promoted by a Single Agency:
There is no restriction on the number of clubs to be formed a single agency.
Rating of Farmers; Clubs
To facilitate the graduation of farmers Clubs into Federations of Farmers Clubs or
Producers Groups/Companies, it would be desirable for the sponsoring agencies
to rate the Farmers Clubs as per prescribed parameters. However, the rating of the
clubs is not linked to any releases to be made out of the assistance under the new
policy.
Awards to Best Working Clubs:
Awards would be given to be provided to best working clubs at the district, state and
national levels, based on the rating norms.
Capacity Building for Adoption of Technology (CAT):
NABARDs Capacity Building for Adoption of Technology (CAT) programme may be
used for the benefit of farmers club members for training and exposure visits within
and outside the State.
Release of assistance:
Release of assistance will be in 2 instalments viz. 50% by way of release in
advance and the remaining 50% by way of reimbursement.
Incentives to sponsor agencies:
Incentive is provided to agencies (other than banks) for the formation and nurturing
of FCs.
Financial Support from NABARD
NABARD assistance to all agencies will uniformly be @Rs.10,000/- per club per
annum for a period of 3 years irrespective of whether they are institutional or other
agencies and also the region concerned. The assistance will be towards meeting
the following minimum and mandatory expenses:
S. No.

Particulars

Amount (Rs.)

1.

Formation & Maintenance Expenses

2.

Base Level
(BLOTP)

3.

Meet with Experts (2 Programmes in a year)

3,000.00

Total

10,000.00

Orientation

Training

2,000.00
Programme

5,000.00

NGOs/KVKs will be provided with an incentive of Rs.2,000/- per club out of the total
assistance of Rs.10,000/- per club per annum.
NGOs/KVKs who are operating in hilly/remote/naxal affected areas, will be provided
with additional incentive of Rs.3,000/- per club for a period of 3 years over and
above Rs.10,000/- referred to above.
Revival Package of Assistance for Dormant Clubs:

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In order to revive the dormant/defunct FCs, NABARD has introduced a revival

package. The assistance may be used towards meeting the revival cost including
arranging exposure visits for members of such dormant clubs as well as
concerned branch managers. Package of assistance may be extended to
NGOs/VAs for revival of clubs promoted by banks.
Sustainability of Farmers Clubs:
Regular source of income and consistency in their activities is the key to
sustainability of FCs. Sustainability of Farmers Clubs may be ensured through
creation of a corpus at the club level through measures such as:
Token membership fees (to be decided by members)
Monthly savings (to be decided by the Club members)
Service charge for SHG/JLG loans recommended to banks @0.5% and 1%.
(This is suggestive and the club members can decide themselves.)
Commission/incentive for selling insurance products (as per negotiations
with individual insurance companies).
Commission for acting as Business Facilitators/Business Correspondents
(to be negotiated with individual banks).
Any other charges for services provided to other agencies like Government,
Corporate Bodies etc.).
Such steps are expected to make the Farmers Clubs self sustaining over a period
of 3-5 years, when the funding support from institutional agencies is withdrawn.
Status of Farmers Clubs :
During 2009-10, 16,590 Farmers Clubs have been formed taking the cumulative
number of farmers Clubs to 54,805 as on 31st March 2010.
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