Banks can no more afford to be laid-back on crop insurance front with the Centre now fixing more responsibility on them for the effective implementation of the Pradhan Mantri Fasal Bima Yojana (PMFBY), a top Agriculture Ministry official has said.

Not deducting the PMFBY premium while disbursing crop loans could lead to the banks themselves making good the crop losses, if any, suffered by a farmer, Ashish Kumar Bhutani, Joint Secretary in this Ministry said at a PHD Chamber of Commerce and Industry event on crop insurance in the capital.

Banks cannot also henceforth delay forwarding the premiums to the insurance companies.

“We have put a stop to all this by bringing penal provisions. Banks will be squarely responsible. In case there is crop loss to a loanee farmer who is not insured, the bank will have to make good the losses. The onus is now on banks and insurance companies to deliver”, Bhutani, who is seen a key architect in designing of the PMFBY

PMFBY-launched in February 2016 and seen as a game changer for farmers-- is the biggest intervention till date by the Government in the field of crop insurance.

Through the PMFBY, the Modi-led Government has sought to provide a complete package of risk mitigation to farming community.

Bhutani said that PMFBY was not comparable with earlier crop insurance schemes. He highlighted that crop insurance has been extended to only farm loans worth ₹ 60,000 crore out of the total farm credit of nearly ₹ 6.5 lakh crore

Although crop insurance is compulsory, only 12 per cent of loanees were being covered under insurance.

Part of the problem was that the banks were not insuring the farmers who were coming within the insurance cycle for the notified crops, Bhutani said.

He also said that Centre was trying to bring non-loanee farmers (such as sharecroppers) too within the PMFBY fold. There is a separate committee of the Government looking into the land leasing policy. “We should be able to address the aspect of sharecropper also getting the benefit of crop insurance”

INSURER’S TAKE

Yogesh Lohiya, Chairman of PHDCCI’s Insurance Committee, rued that ‘L1’ story (L1 is a practice where Government awards contract to the bidder who quotes the lowest price) has started to play in PMFBY and insurance companies are killing themselves quoting unviable prices.

“It is unthinkable at all how insurance companies will pay the claim. I feel frustrated as to how insurance companies can make claim payments under this circumstance. PMFBY scheme is a wonderful scheme. But implementation is key”, Lohiya, who is CEO & MD IFFCO Tokio General Insurance said at the event.

Source - thehindubusinessline.com