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Growers rescued from moneylenders
Apple economy and interventions by J&K Bank
SRINAGAR, Apr 13: The J&K Bank has currently extended finance to the tune of over Rs 900 crore to the apple sector. This includes Rs 363 crores to more than 17200 growers in two districts of Baramulla and Shopian.

As per the data, the Bank has already extended the implementation of its ‘Apple Project’ to all the districts of valley and envisages tapping more. The “Apple Project” was launched on the directions of chairman and chief executive officer of the Bank, Mushtaq Ahmad

“Out of a total 2.83 lakh apple growers in the state, J&K Bank’s finance has been extended to about 17300 growers in two districts of Baramulla and Shopian. Tapping the remaining growers will generate credit of about Rs.6500-7000 crore more,” the data added.

Executive president Parvez Ahmad, who is heading the apple project, while commenting on the role of J&K Bank in making the apple sector vibrant said, “Our horticulture sector in Kashmir region is mainly driven by apple industry. It is an under-serviced and potential sector and next to personal and consumption loans the major attraction for the bank in the retail sector is the apple finance. Keeping in view in the major contribution of this sector in the State Domestic Product and its classification in the priority sector coupled with the relaxed asset classification norms, we see a lot of advantages for the bank to have a special focus on this sector.

Bank has already customised its apple finance scheme to meet variant needs of the small apple growers. We have already set up plans for the growth and development of apple industry and realise its true potential,” he added.

Parvez stated that the bank is very much on track to facilitate to a common grower the freedom of choosing buyers and negotiating prices for his hard-earned produce. “It is this choice that lies at the centre of not only his financial empowerment but economic success of the whole apple industry,” he said.

An independent study conducted in 2011 by Enterprise Solutions to Poverty (ESP), an innovation group headed by Nancy M Barry, who is recognised as a global leader in building finance and enterprise systems, revealed that over 75 percent of small farmers get their financing from moneylenders, with only 10 percent from banks. Even fixed investment for irrigation or tree replenishment is rare. The study suggested that small farmers will need access to money, technology and procurement options if the high cost of trader finance and procurement is to be avoided, and if farmer productivity and incomes are to increase.

Interestingly, according to the study, farmers prefer moneylenders to banks because traders provide a market as well as money, and are willing to finance for emergencies as well as for crop requirements.

The study revealed that 75 percent of apple growers get their financing from traders and are often unaware that its effective interest cost of financing from money lenders are 36 percent to 54 percent.

Farmers interviewed during the study perceived that charges by the traders are similar to what a bank would charge – which averages 12.7 percent. The farmers were not aware of bank financing opportunities, but think that there are high documentation requirements and hassles to get a bank loan.

Precisely, the study findings revealed that apple farmers showed that they have to rely on moneylender for advances. During the study it was found that majority of the farmers haven’t any experience with bank loans. The larger farmers rely on savings to finance their operations. Many farmers are slowly replacing their orchard stock, meaning that superior trees could be planted, and that their investment loans are desired. Irrigation is not used, but would have a substantial impact on productivity against the bank’s interest ranging from minimal 4-11% (because of the Bank’s pursued interest subvention scheme).

Potential for horticulture lending

- Agriculture involves about 70 percent of the population and contributes 23 percent to the GDP. Apple accounts for 86 percent by value of the state’s horticulture output. J&K state produces 77 percent of India’s total apple output and controls 49 percent of land dedicated to apple cultivation

- Out of a total 2.83 lakh apple growers in the state, bank’s finance has been extended to about 17300 growers in two districts of Baramulla and Shopian. Tapping the remaining growers will generate credit of about Rs.6500-7000 crore more.

Intervention by J&K Bank after the study findings

J&K Bank Apple Project:

In the backdrop of this study, J&K Bank chairman and chief executive officer, Mushtaq Ahmad, immediately directed his management team to tailor appropriate interventions so that apple growers rescued from exploitative noose of usurious moneylenders and empowered sufficiently in terms of finance and guidance to realise the true potential of apple economy. In quick response to the directions, the bank conceived of and devised a comprehensive project under the title of ‘J&K Bank Apple Project’ and revisited its Apple finance scheme to make it hassle free with minimum documentation.

In essence, the project envisages complete institutional financing of the Apple crop to empower particularly the grass root grower to ensure that the state proceeds ahead towards becoming a rich horticulture economy The project is aimed at transforming the state into an agriculturally rich economy with major contribution from Apple Industry. The Bank is conducting the project in a way that brings a common grower to the center of state’s Apple economy.


In its pilot-study of the project, the Bank initially focused on apple rich districts of Baramulla and Shopian with gradual and time-bound extension of other objectives within project implementation period of five years.

Under the project special teams of Apple Project Managers headed by Zonal coordinators were constituted, who worked on a door-to-door awareness method. An extensive awareness programme was launched to apprise the growers about the schemes.

These teams comprising of 3 to 4 officers literally camped in the villages of the two districts and prepare the profile of growers at their door-steps in these areas.

Further, these teams counseled the grass root growers individually, in groups and advised them in the matters of finance and other related issues to bolster their confidence and efforts towards self-reliance and sense of ownership of their crop.

Moreover, timely camps were organised in which some experts on horticulture imparted free training and awareness to the growers on the use of fertilizers, pesticides, methods of pruning, irrigation, control of rats and rodents, art of picking of apple and packing etc.

The growers are also informed about scientific methods of cultivation and use of technology, which go a long way to enable them to grow more and save much.

While conducting the project in districts of Shopian and Baramulla last year, the Bank was able to disburse a huge amount of Rs 363.58 Crores among the 17336 growers of two districts.

This financial exposure is included in the Bank’s over-all exposure of more than Rs 900 Crores in the apple economy.

*Enablers/Support Structures*

Besides financing the growers, the Bank has entered into a strategic tie-up with Agriculture University, horticulture department to guide growers in better farming practices. This has resulted in better yields.

Besides, various advisory services through experts are being extended to the growers. Almost 3 lakh farmers are being enrolled for SMS services with strategic partners for daily inputs about weather, use of fertilizers, market situation etc.

In order to have a reliable data base of apple growers, the bank has already completed the profiling exercise of apple growers which has been centralized for assessing further scope of the project.

The Bank has also sped-up its financing to the critical support structure like CA stores, which extend shelf-life of apples to 10-12 months, to help and sustain the small apple growers in the process.

*Interest Subvention:*

One of the major reliefs in the scheme was that the bank pleaded on behalf of growers at the central level and got a special sanction for the extension of interest subvention scheme for them through the bank.

By virtue of this interest subvention scheme, the loans under apple finance scheme of the bank are granted at an interest rate ranging from 7-10%.

Further 3 % interest rebate is given to the growers if they repay the loan within the stipulated period. This means the loans are available at 4%, which is a huge leap towards empowerment to the growers.

*Proper Monitoring:*

As the project progresses ahead, a proper monitoring system has been set in place at the corporate level to assess and scrutinize the actual unfolding of the project on ground so that timely interventions are made instantly wherever the need arises.


This relief has changed the fortunes of the growers and now the manipulative trend that was set earlier has been reversed to an extent whereby the traders themselves approach the grower for procuring the crop.

Earlier, the grower was at the mercy of the traders and the moneylenders. As the Bank engages in impact study of its pilot effort, significant strides have been made towards rescuing the farmers from exploitative noose of usurious money lenders.

The impact of J&K Bank Apple Project is that many farmers in the valley have shifted their agricultural practices to horticulture. Especially in south Kashmir many farmers have converted their agricultural land into orchards after they noticed changing living standard of their fellow farmers engaged in horticulture activities.

The growers are of the opinion that the rate hike in apple last year was direct result of their strength to bargain with their counterparts outside state mandis made possible only by their sense of being empowered financially by the Bank.
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News Updated at : Sunday, April 14, 2013
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