By the Court.—On 5 August 1998, the Reserve Bank of India (RBI) advised banks to introduce a Kisan Credit Card Scheme on the lines of a scheme which was prepared by the National Bank for Agriculture and Rural Development (NABARD). Subsequently, revisions took place on 4 October 2004 and on 11 May 2012. Prior to 7 August 2011, crop insurance was not compulsory. It came to be made compulsory by a circular of the RBI dated 7 August 2012.

2. The Union Government in the Department of Agriculture issued a circular on 4 February 2014 on the National Crop Insurance Programme (NCIP)/Modified National Agricultural Insurance Scheme (MNAIS). The salient aspect of the scheme envisages the selection of an insurance company from amongst empanelled insurance companies of the Department of Agriculture in the Union Government by the State Governments which implement the scheme in the States. At the level of the State Governments, the department which was looking after the implementation of the National Agricultural Insurance Scheme (NAIS) and Weather Based Crop Insurance Scheme (WBCIS) was designated as the nodal department for implementation of the MNAIS component of NCIP. A State Level Coordination Committee on Crop Insurance (SLCCCI) which was overseeing the implementation of the erstwhile NAIS was authorized to oversee the implementation of MNAIS. All farmers, including sharecroppers and tenant farmers growing notified crops in notified areas were eligible for coverage. The compulsory component of the scheme envisages that all farmers availing of Seasonal Agricultural Operation (SAO) loans from financial institutions for notified crops would be compulsorily covered. The scheme is optional for non loanee farmers. The scheme envisages that the nodal bank system under the erstwhile pilot scheme will continue after MNAIS. The implementing insurance company is required to deal with the designated nodal bank branches generally at the district/regional level.

3. RBI has stated that a review of the data in respect of the number of farmers covered to gauge the implementation of NCIP is done in district level review committee meetings on a quarterly basis in all districts chaired by the District Collectors, besides being attended by RBI representatives. A review of crop insurance is part of the agenda of such meetings. At the State level, the State Level Banker’s Committee (SLBC) holds meetings which are attended by officers of the RBI.

4. On 24 July 2015, RBI addressed a communication to the controllers of the concerned banks in the State of Uttar Pradesh, inter alia, highlighting the following concerns:

“During the course of deliberations in various fora i.e. SLBC Committee Meetings held on February 25, 2015 and June 26, 2015; and High Level Round Table Conference held on June 15, 2015 by the Government of Uttar Pradesh and chaired by the Chief Secretary, several concerns were expressed by officials of the State Government on the shortcomings on the part of the bank branches in the implementation of the insurance schemes under the National Crop Insurance Programme. It has been brought to our notice the instances wherein bank branches have not debited the account of the loanee farmer with insurance premium for covering eligible crops, such premia after debiting have not been remitted to the office of the concerned insurance company in time and also that bank branches have failed to pass on the insurance claims received from the insurance companies to the concerned beneficiary farmers for various reasons. It is a matter of serious concern that occurrence of such shortcomings and irregularities, besides putting the concerned farmers to avoidable hardships and difficulties, also deprives them of the benefit of the crop insurance scheme, which in turn may have adverse effect on the sustainable living of the farmer.” (emphasis