Primary Cooperative Agriculture and Rural Development Bank: Minor Irrigation Loan (Tamil Nadu)

What is the PCARD minor irrigation loan?

The minor irrigation loan is the core investment credit product of the Primary Cooperative Agriculture and Rural Development Banks (PCARD banks) of Tamil Nadu, which operate under the Cooperation, Food and Consumer Protection Department and the Registrar of Cooperative Societies. It funds the work that brings water to a field, digging or deepening a well, sinking a bore well, buying and installing a pumpset and motor, and laying conveyance pipelines.

The Tamil Nadu government scheme directory records the loan as ranging from Rs 65,000 to Rs 1,20,000, at an interest rate of 11 to 11.75 per cent. Both the amount and the rate are appraised case by case: the amount against the estimate for the specific work, the rate under the lending policy approved for each bank.

According to the Registrar of Cooperative Societies, 180 Primary Cooperative Agriculture and Rural Development Banks function across the state. They are the long-term tier of the cooperative credit structure, distinct from the short-term tier of District Central Cooperative Banks and village-level Primary Agricultural Cooperative Credit Societies. Their whole reason for existing is that a well or a pumpset pays for itself over a decade, not over one crop cycle, and therefore cannot be financed with a seasonal crop loan.

The current constraint, stated plainly. The Registrar of Cooperative Societies notes that because refinance from the National Bank for Agriculture and Rural Development is not available, PCARD banks are at present issuing only jewel loans out of the funds they have. Minor irrigation lending is exactly the kind of investment credit that depends on NABARD refinance. Before you spend money on an encumbrance certificate and a contractor's estimate, go to the taluk bank and ask whether minor irrigation loans are being sanctioned this year.

What minor irrigation means in the Tamil Nadu context. Most of Tamil Nadu's irrigated area outside the delta depends on groundwater. An open well that has gone dry needs deepening; a farmer moving from rainfed to irrigated cropping needs a bore well and a pumpset; a farmer who already has water often loses much of it in unlined channels and needs a buried pipeline. Each of these is a one-time capital cost with a return spread over years, and each is a standard minor irrigation proposal at a PCARD bank.

Who is eligible, and who is not eligible?

You are eligible if:

• You are a member of the Primary Cooperative Agriculture and Rural Development Bank for your taluk, or take membership by subscribing to a share.
• You own agricultural land in the bank's area of operation, with patta and chitta in your name.
• The land is free of prior encumbrance, or any existing charge can be cleared or accommodated, as shown by the encumbrance certificate.
• You have a specific minor irrigation proposal with an estimate, a well, a bore well, a pumpset, a pipeline or a combination.
• The groundwater position permits the work. Banks and the Agricultural Engineering Department both look at whether the block is over-exploited before financing a new well.
• You are not in default to the cooperative credit system.

You cannot apply, or are not eligible, if:

• You are a tenant or sharecropper without land in your own name, since the loan is secured on a mortgage. This is the single biggest exclusion in practice.
• The land lies outside the taluk bank's jurisdiction.
• The encumbrance certificate shows a subsisting mortgage that cannot be cleared, so the bank cannot take a first charge.
• You are an existing defaulter at a cooperative bank or society.
• You want the loan for something other than minor irrigation; farm machinery, horticulture or animal husbandry are financed under separate heads at the same bank.
• The bank has no investment credit funds for the year. This is a real and current limitation and not a reflection on your application.

How to apply for a minor irrigation loan

1. Visit the Primary Cooperative Agriculture and Rural Development Bank in your taluk and ask the secretary whether minor irrigation loans are being sanctioned in the current year, and what the rate and repayment period are.
2. Take membership in the bank if you are not already a member.
3. Get an estimate for the work: from a well-digging contractor, a rig operator or a pumpset dealer; itemising civil work, the pumpset and motor, pipeline and electrical work.
4. Assemble the land file: patta, chitta, adangal, and an encumbrance certificate from the Sub-Registrar covering the statutory period for the land being mortgaged.
5. Complete the loan application form at the bank, stating the survey number, the extent, the proposed work and the amount sought, and attach your identity and address proof.
6. Submit the application and take an acknowledgement with a serial number and date.
7. Attend the technical inspection and valuation. The bank inspects the field, verifies the survey number against the records, values the security and assesses whether the additional income from irrigation can service the instalments.
8. Execute the mortgage and loan documents after sanction. Read the sanction letter for the rate, the basis of charging interest, the gestation period and the number of yearly instalments.
9. Take disbursement in stages — typically against the progress of the civil work and against invoices for the pumpset, and complete the work within the period allowed.
10. Apply for the electricity service connection for the pumpset in parallel, because a completed well without a connection earns nothing.

What documents are required?

What the loan costs, and how to read the rate

The scheme directory records 11 to 11.75 per cent. Two questions decide what you actually pay:

• Is interest charged on a reducing balance or on a flat basis? The same headline number costs very different amounts under the two methods, and on a long-tenure loan the difference is large. Ask, and get the answer on the sanction letter.
• Is there a gestation period? Indicative unit costs published for Tamil Nadu put minor irrigation and pumpset repayment at around 11 to 15 years including a gestation period of roughly 23 months, with yearly instalments. A gestation period means you do not start repaying principal while the well is being dug and the crop is not yet irrigated, but interest may still accrue during it.

Note also that the bank finances a proportion of the project, not all of it. The margin has to come from your own resources, and a farmer who has not planned for it stalls halfway through the civil work.

How to check the status of your application

1. Ask the bank secretary for the serial number and the current stage; inspection, valuation, board sanction or documentation.
2. Ask when the board next meets, since sanctions are made by the elected board of the bank.
3. Ask about the funds position for investment credit in the current year.
4. Where the bank does not act, approach the Deputy Registrar or Joint Registrar of Cooperative Societies for your district.

Why minor irrigation loan applications get rejected

• No refinance funds for investment credit in the year.
• Land not in the applicant's name, or held only on lease.
• Encumbrance disclosed on the land offered as security.
• Over-exploited groundwater block, where sinking a new well is not supported.
• Estimate missing or inflated, so the amount cannot be appraised.
• Existing default in the cooperative system.
• Survey number mismatch between the patta, the adangal and the application. A common clerical cause of long delays.

Where to raise a grievance

• Secretary and elected board of the taluk PCARD bank, first.
• Deputy Registrar or Joint Registrar of Cooperative Societies for your district, under the Cooperation, Food and Consumer Protection Department.
• Registrar of Cooperative Societies, Tamil Nadu; rcs.tn.gov.in.
• Tamil Nadu Cooperative State Agriculture and Rural Development Bank, the apex body of the long-term cooperative credit structure.

Applying is free. No payment beyond the bank's notified charges should be made to any officer, valuer or intermediary to obtain a sanction.