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Crop Insurance :: National Agricultural Insurance Scheme (NAIS)

National Agricultural Insurance Scheme (NAIS)
(Rashtriya Krishi Bima Yojana - RKBY)

Salient Features of the NAIS Scheme (Click the respective points below)



  • The objectives of the RKBY are as under :-
  • To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.
  • To encourage the farmers to adopt progressive farming practices, high value in-puts and higher technology in Agriculture.
  • To help stabilise farm incomes, particularly in disaster years.

Salient Features of the NAIS Scheme


1. Crops Covered:

  • The Crops in the following broad groups in respect of which i) the past yield data based on Crop Cutting Experiments (CCEs) is available for adequate number of years, and ii) requisite number of CCEs are conducted for estimating the yield during the proposed season:
  • Food crops (Cereals, Millets & Pulses),    Oilseeds, Sugarcane, Cotton & Potato      
    (Annual Commercial / annual Horticultural crops)
  • Other annual Commercial / annual Horticultural crops subject to availability of past Yield data will be covered in a period of three years. However, the crops which will be covered next year will have to be spelt before the close of preceding year.

2. States and Areas to be covered


  • The Scheme extends to all States and Union Territories. The States / UTs opting for the Scheme, would be required to take up all the crops identified for coverage in a given year.
  • Exit clause: The States / Union Territories once opting for the Scheme, will have to continue for a minimum period of three years.

3. Farmers to be covered


      All farmers including sharecroppers, tenant farmers growing the notified crops in the notified areas are eligible for coverage.

The Scheme covers following groups of farmers:
On a compulsory basis: All farmers growing notified crops and availing Seasonal Agricultural Operations (SAO) loans from Financial Institutions i.e. Loanee Farmers.
On a voluntary basis: All other farmers growing notified crops (i.e., Non-Loanee farmers) who opt for the Scheme.

4. Risks Covered & Exclusions


  • Comprehensive risk insurance will be provided to cover yield losses due to non-preventable risks, viz.:
    1. Natural Fire and Lightning
    2. Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado etc.
    3. Flood, Inundation and Landslide
    4. Drought, Dry spells
    5. Pests/ Diseases etc.
  • Losses arising out of war & nuclear risks, malicious damage & other preventable risks shall be excluded.

5. Sum Insured / Limit of Coverage


  • The Sum Insured (SI) may extend to the value of the threshold yield of the insured crop at the option of the insured farmers. However, a farmer may also insure his crop beyond value of threshold yield level upto 150% of average yield of notified area on payment of premium at commercial rates.
  • In case of Loanee farmers the Sum Insured would be at least equal to the amount of crop loan advanced.
  • Further, in case of Loanee farmers, the Insurance Charges shall be an additionally to the Scale of Finance for the purpose of obtaining loan.
  • In matters of Crop Loan disbursement procedures, guidelines of RBI / NABARD shall be binding.

6. Premium Rates





Premium rate



Bajra & Oilseeds

3.5% of SI or Actuarial rate, whichever is less



Other crops (cereals, other millets & pulses)

2.5% of SI or Actuarial rate, whichever is less




1.5% of SI or Actuarial rate, whichever is less



Other crops (other cereals, millets, pulses & oilseeds)

2.0% of SI or Actuarial rate, whichever is less


Kharif & Rabi

Annual Commercial / annual Horticultural crops

Actuarial rates

  • Transition to the actuarial regime in case of cereals, millets, pulses & oilseeds would be made in a period of five years. The actuarial rates shall be applied at District / Region / State level at the option of the State Govt./UT.

7. Premium subsidy


  • 50% subsidy in premium is allowed in respect of Small & Marginal farmers, to be shared equally by the Government of India and State/UT Govt. The premium subsidy will be phased out on sunset basis in a period of three to five years subject to review of financial results and the response of farmers at the end of the first year of the implementation of the Scheme.
  • The definition of Small and Marginal farmer would be as follows:

Small Farmer:

  • A Cultivator with a land holding of 2 hectares (5 acres) or less, as defined in the land ceiling legislation of the concerned State/ UT.

Marginal Farmer:

  • A Cultivator with a land holding of 1 hectare or less (2.5 acres).

8. Sharing of Risk


  • Risk will be shared by Implementing Agency (IA) and the Government in the following proportion:
  • Food crops & Oilseeds: Till, complete transition to Actuarial regime in a period of five years takes place, claims beyond 100% of premium will be borne by the Government. Thereafter, all normal claims, i.e. claims upto 150% of premium will be met by IA and claims beyond 150% shall be paid out of Corpus Fund for a period of three years. After this period of three years claims upto 200% will be met by IA and above this ceiling, out of the Corpus Fund.
  • (b)Annual Commercial crops / annual Horticultural crops: Implementing Agency shall bear all normal losses, i.e. claims upto 150% of premium in the first three years and 200% of premium thereafter subject to satisfactory claims experience. The claims beyond 150% of premium in the first three years and 200% of premium thereafter shall be paid out of Corpus Fund. However, the period of three years stipulated for this purpose will be reviewed on the basis of financial results after the first year of implementation and the period will be extended to five years if considered necessary.
  • To meet catastrophic losses, a Corpus Fund shall be created with contributions from the Government of India and State Govt / UT on 50:50 basis. A portion of Calamity Relief Fund (CRF) will be used for contribution to the Corpus Fund.

9. Area approach and Unit of Insurance


  • The Scheme would operate on the basis of ‘Area Approach’ i.e., Defined Areas for each notified crop for widespread calamities and on an individual basis for localized calamities such as hailstorm, landslide, cyclone and flood. The Defined Area (i.e., unit area of insurance) may be a Gram Panchayat, Mandal, Hobli, Circle, Phirka, Block, Taluka etc. to be decided by the State/UT Govt. However, each participating State/UT. Govt. will be required to reach the level of Gram Panchayat as the unit in a maximum period of three years.
  • Individual based assessment in case of localized calamities, to begin with, would be implemented in limited areas on experimental basis, initially and shall be extended in the light of operational experience gained. The District Revenue administration will assist Implementing Agency in assessing the extent of loss.

10. Seasonality Discipline


        * The broad seasonality discipline followed for Loanee farmers will be as under:




Loaning period

April to September

October to Next March

Cut-off date for receipt Of Declarations



Cut-off date for receipt Of yield data

January / March

July / September

  • The broad cut-off dates for receipt of proposals in respect of Non-loanee farmers will be as under :
    1. Kharif season : 31st July
    2. Rabi season : 31st December
  • However, seasonality discipline may be modified, if and where necessary in consultation with State / UT and the Govt. of India.

11. Estimation of Crop Yield


  • The State/UT Govt. will plan and conduct the requisite number of Crop Cutting Experiments (CCEs) for all notified crops in the notified insurance units in order to assess the crop yield.
  • The State / UT Govt. will maintain single series of Crop Cutting Experiments (CCEs) and resultant Yield estimates, both for Crop Production estimates and Crop Insurance.
  • Crop Cutting Experiments (CCEs) shall be undertaken per unit area /per crop, on a sliding scale, as indicated below :


Unit Area

Minimum number of C.C.E.s required to be done


Taluka / Tehsil / Block



Mandal / Phirka / any other smaller unit area comprising 8-10 villages



Gram Panchayat comprising 4-5 villages


  • A Technical Advisory Committee (T.A.C.) comprising representatives from N.S.S.O., Ministry of Agriculture (G.O.I.) and IA shall be constituted to decide the sample size of CCEs and all other technical matters.

12. Levels of Indemnity & Threshold Yield


  • Three levels of Indemnity, viz., 90%, 80% & 60% corresponding to Low Risk, Medium Risk & High Risk areas shall be available for all crops (cereals, millets, pulses & oilseeds and annual commercial / annual horticultural crops) based on Coefficient of Variation (C.V) in yield of past 10 years’ data. However, the insured farmers of unit area may opt for higher level of indemnity on payment of additional premium based on actuarial rates.
  • The Threshold yield (TY) or Guaranteed yield for a crop in an Insurance Unit shall be the moving average based on past three years average yield in case of Rice & Wheat and five years average yield in case of Other crops, multiplied by the level of indemnity.

13. Nature of Coverage and Indemnity


  • If the ‘Actual Yield’ (AY) per hectare of the insured crop for the defined area [on the basis of requisite number of Crop Cutting Experiments (CCEs)] in the insured season, falls short of the specified ‘Threshold Yield’ (TY), all the insured farmers growing that crop in the defined area are deemed to have suffered shortfall in their yield. The Scheme seeks to provide coverage against such contingency.
  • ‘Indemnity’ shall be calculated as per the following formula :
    ( Shortfall in Yield / Threshold yield ) X Sum Insured for the farmer {Shortfall in Yield = ‘Threshold Yield - Actual Yield' for the Defined Area}.

13a. Indemnity in case of Localised Risks:

  • Loss assessment and modified indemnity procedures in case of occurrence of localised perils, such as hailstorm, landslide, cyclone and flood where settlement of claims will be on individual basis, shall be formulated by IA in coordination with State / UT. Govt.
  • The loss assessment of localised risks on individual basis will be experimented in limited areas, initially and shall be extended in the light of operational experience gained. The District Revenue administration will assist IA in assessing the extent of loss.

14. Procedure for approval & Settlement of claimsedure for approval & Settlement


     Once the Yield Data is received from the State/UT Govt. as per the prescribed cut-off dates, claims will be worked out and settled by IA.

  • The claim cheques along with claim particulars will be released to the individual Nodal Banks. The Banks at the grass root level, in turn, shall credit the accounts of the individual farmers and display the particulars of beneficiaries on their notice board.
  • In the context of localised phenomenon, viz., hailstorm, landslide, cyclone and flood, the IA shall evolve a procedure to estimate such losses at individual farmer level in consultation with DAC/ State / UT. Settlement of such claims will be on individual basis between IA and insured

 15. Financial Support towards Administration & Operating (A&O) expensescial Support towards Administration & Operating (A&O) expenses


      The A&O expenses would be shared equally by the Central Government & respective State Government on sunset basis [ 100% in 1st year, 80% in 2nd year, 60% in 3rd year, 40% in 4th year, 20% in 5th year and ‘zero’ thereafter ].

16. Corpus Fund


       To meet catastrophic losses, a Corpus Fund shall be created with contributions from the Government of India and State / UT on 50:50 basis. A portion of Calamity Relief Fund (CRF) shall be used for contribution to the Corpus Fund.

  • The Corpus Fund shall be managed by Implementing Agency (IA).

17. Re-Insurance Cover


    Efforts will be made by IA to obtain appropriate reinsurance cover for the proposed
RKBY in the international Reinsurance market.

18. Management of the Scheme, Monitoring and reviewagement of the Scheme, Monitoring and review


  • In respect of Loanee farmers, the Banks shall play the same role as under CCIS.
  • In respect of non-Loanee farmers, Banks shall collect the premium along with the Declarations and send it to IA within the prescribed time limits. However, in areas where IA has requisite infrastructure, a non-loanee farmer will have option to send premium along with Declaration, directly to IA within the time limits.
  • Selection of the Banks will be on the basis of Service Area Approach (SAA) of RBI or at the option of the Banks (where Co-operative Banks have good network). The Department of Agriculture, Agricultural Statistics, Directorate of Economics and Statistics, Department of Co-operation, Revenue Department of the State Government will be actively involved in smooth implementation of the Scheme.
  • The Scheme will be implemented in accordance with the operational modalities as worked out by IA in consultation with Dept. of Agriculture & Co-operation.
  • During each crop season, the agricultural situation will be closely monitored in the implementing States / Union Territories. The State / UT Department of Agriculture and district administration shall set up a District Level Monitoring Committee (DLMC), who will provide fortnightly reports of Agricultural situation with details of area sown, seasonal weather conditions, pest incidence, stage of crop failure {if any} etc.
  • The operation of the Scheme will be reviewed annually, and modifications as may be required would be introduced. Periodic Appraisal Reports on the Scheme would be prepared by Ministry of Agriculture, the Government of India / Implementing Agency.

19. Implementing Agency (IA) Agency (IA)


  • An exclusive Organization would be set up in due course, for implementation of RKBY. Until such time as the new set up is created, the ‘G.I.C. of India’ will continue to function as the Implementing Agency.

 20. Benefits expected from Scheme


    The Scheme is expected to:

  • Be a critical instrument of development in the field of crop production, providing financial support to the farmers in the event of crop failure.
  • Encourage farmers to adopt progressive farming practices and higher technology in Agriculture.
  • Help in maintaining flow of agricultural credit.
  • Provide significant benefits not merely to the insured farmers, but, to the entire community directly and indirectly through spillover and multiplier effects in terms of maintaining production & employment, generation of market fees, taxes etc. and net accretion to economic growth.
  • Streamline loss assessment procedures and help in building up huge and accurate statistical base for crop production.

Role of Various Agencies:
For the purpose of the Scheme, the Scheduled Institutions engaged in disbursing SAO loans as per the relevant guidelines of NABARD / RBI will be reckoned as Financial Institutions.
Each scheduled Commercial bank shall with concurrence of IA fix Nodal points which would deal with IA on behalf of branches in the division / district / state. The Nodal points for Commercial banks will be minimum one level above the Branch office. The Nodal points for Cooperative banks will be DCC Banks and those for RRBs, their Head Office.
Nodal points would be designated for implementation and these banks would attend to the following functions:

  1. On receipt of the communication on notification of crops and areas from the State Govt./ UT, the Nodal banks will communicate the same to the branch offices under their control.
  2. The FIs would advance additional loan to Loanee farmers to meet requirement of Insurance charges / premium as applicable upto the extent of crop loan.
  3. Each such Nodal point would submit crop-wise, defined area-wise, monthly Crop insurance Declarations to the Office of IA, in the prescribed format, along with Insurance charges payable on all crop loans coming under the purview of the Scheme in case of Loanee farmers and based on Proposals received in case of other farmers.
  4. The Apex FIs shall issue appropriate instructions to Nodal banks as well as crop loan disbursing branches to ensure smooth functioning of the Scheme.
  5. For insurable crop loans disbursed under Kissan Credit Card (KCC), the FIs shall maintain all controls and records as required under the Scheme.

Other Responsibilities of FIs will be:
     · To educate the farmers on the Scheme features.
     · To guide the farmers in filing the proposal forms and collecting the required documents. 
     · Following the guidelines while disbursing crop loans and ensuring proper end-use of loan disbursed.
     · To prepare the consolidated statements for Loanee and Non-Loanee members, forwarding the same to the branch along with the premium amount.
     · Maintaining the records of proposal forms, other relevant documents, statements for the purpose of verification by the district committee or representative of the insurer.

  1. FIs will submit Crop Insurance Declarations to IA on monthly basis, where sum insured is on the basis of amount of loan disbursed and within one month time from cut-off date for receipt of proposals, where sum insured is on any other basis.
  2. Claims received by the Nodal points, will be remitted to individual branches/PACS with all particulars within seven days and these branches/PACS will in turn credit the Accounts of beneficiary farmers within seven days. The list of beneficiary farmers with claim amount will be displayed by the branch / PACS.
  3. The IA will have access to all relevant records/ledgers at the Nodal point/Branch/PACS at all times.
  4. The IA will be provided with all the norms / guidelines relating to SAO crop loan disbursements as formulated by RBI / NABARD. Any amendments / simplification of procedures / norms from time to time will be duly made available to IA by the concerned institutions. In the absence of such communication, IA shall be free to not take cognisance of such modifications.
  5. In case a farmer is deprived of any benefit under the Scheme due to errors / omissions / commissions of the Nodal Bank/Branch/PACS, the concerned institutions only shall make good all such losses.
  6. If the farmer is adopting mixed cropping, the sum insured of a crop should be on the basis of it's proportionate area in the mixed cropping.


  1. The State Government / UT will notify crop wise notified areas and premium rates as applicable (in case of commercial/horticultural crops) well in advance of each crop season.
  2. The State Government / UT administration would, in advance provide to the IA, Unit Area-wise yield data of immediate past 10 years for all crops notified under the Scheme.
  3. To the extent possible, the State Government / UT administration would notify smaller defined areas for various crops, keeping in mind that smaller areas will be more homogeneous and would be more reflective of all crop losses, including localized perils like hailstorm, landslide etc.
  4. The State Government shall issue the requisite Notification and communicate to all participating FIs during every crop season. The Notification of the State Government may essentially contain the following information: 
    · Crops and Defined areas notified in various districts. 
    ·  Premium rates and subsidy, if and as applicable for various groups of farmers and crops.
    · The cut-off dates for collection of proposals and remittance of premium with Crop Insurance  Declarations to IA.
  5. The State / UT administration will release it's contribution to Corpus Fund as per the scale and dates fixed by MOA, the Government of India.
  6. The State / Union Territory administration would ensure that Crop Estimation Surveys (CES) in general, and estimation procedures in case of multiple picking crops in particular be strengthened in order to furnish accurate estimates of yield. Further, the State / UT administration will assist IA in assessing the extent of crop loss of individual insured farmers due to operation of localised perils.
  7. To set up various monitoring Committees as required.
  8. The final Yield data in the standard format for all Unit Areas for notified crops for the crop season will be furnished to IA within the stipulated date.
  9. In case, the State /UT administration fail to furnish yield data based on requisite number of CCEs or fail to furnish yield data within the stipulated date, responsibility of such claims, if any arising out of such data will totally rest with State / UT administration.
  10. The IA will be allowed unrestricted access to records of CCEs at grass root / District / State level.
  11. State Government / UT admn. shall set up District Level Monitoring Committee (DLMC), headed by the District Magistrate. The members will be District Agriculture Officer, DCCB, Lead Bank representative and IA. The committee will monitor implementation of Scheme by providing fortnightly crop condition reports and periodical reports on seasonal weather conditions, loans disbursed extent of area cultivated, etc. The DLMC shall also monitor conduct of CCEs in the district.
  12. As the Scheme is optional to Non-loanee farmers, adequate publicity will be provided to ensure maximum coverage of farmers through all means available at the disposal of State / UT administration.


  1. Implementing Agency of the Scheme.
  2. The IA shall open separate Accounts to deal with Corpus Fund and also premiums received under the Scheme.
  3. Building up crop yield database and preparation of Actuarial premium rates through a Professional agency.
  4. Underwriting and Claims finalization.
  5. Responsibility for claims to the extent mentioned in the Scheme.
  6. Negotiating Re-insurance arrangement in the international market.
  7. Co-ordination in organizing training, awareness, publicity programmes.
  8. Providing returns / statistics to the Government of India.
  9. Examining and exploring possibilities of setting up separate agency for implementation of the Scheme.


  1. As the Scheme is compulsory for all Loanee farmers availing SAO loans for notified crops, it is mandatory for all Loanee farmers to insist on coverage of all eligible loans (as per the Scheme provisions) under the Scheme.
  2. If the farmer is adopting mixed cropping, the proportion of different crops in a mixed cropping will have to be compulsorily declared.
  3. In respect of Non-loanee farmers, the Proposals will be accepted only upto stipulated cut-off date, which will be decided in consultation with State Government / UT admn.

    The important duties in case of Non-loanee farmers are as follows:
    • The farmer desiring coverage should have an Account in the branch of the designated bank.
    • The farmer must approach the designated branch / PACS and submit the proposal form in the prescribed format.
    • The farmer must provide documentary evidence in regard to the possession of cultivable land (copy of the pass book, 7/12 / land extract or land revenue receipt should be enclosed).
    • The farmer must furnish area sown confirmation certificate, if required.



Q 1 : What is insurance ?
Ans: Insurance is a fiancial arrangement whereby losses suffered by a few are met from the funds accumulated through small contributions made by many who are exposed to similar risks.
Q 2 : What is crop insurance ?
Ans: Crop insurance is an insurance arrangement aiming at mitigating the financial losses suffered by the farmers due to damage and destruction of their crops as a result of various production risks.
Q 3 : Was there any crop insurance scheme in India prior to NAIS ?
Ans: Yes. From 1972-73 to 1978-79, crop insurance schemes for crops such as cotton, groundnut, potato etc, was implemented in selected places on "individual approach" basis. During the period from 1979 to 1984-85, a pilot crop insurance scheme was implemented for Food crops & Oilseeds on "Area approach" basis. Based on the experience of the pilot scheme, a
Comprehensive Crop Insurance Scheme (CCIS) was implemented from Kharif 1985 till Kharif 1999. The present crop insurance scheme, i.e., National Agricultural Insurance Scheme (NAIS), launched by the Hon'ble Prime Minister on 22nd June 1999 replaced the CCIS from Rabi 1999-2000 seasons.

Q 4 : What are the objectives of National Agricultural Insurance Scheme ?
Ans: The objectives of the NAIS are as under:-
• To provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases so as to restore their credit worthiness for ensuing season.
• To encourage the fanners to adopt progressive farming practices, high value in-puts and higher technology in Agriculture.
• To help stabilize farm incomes, particularly in disaster years.

Q 5 : What are the various risks covered under the scheme?
Ans: The Scheme provides comprehensive risk insurance for yield losses due to :
(i) Natural Fire and Lightening, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado Flood, Inundation and Landslide.
(ii) Drought, Dry spells.
(iii) Pests / Diseases etc.

Q 6 : How many states are participating in the scheme?
Ans.: At present this scheme is being implemented in 23 States and UTs (except Punjab, Manipur, Nagaland, Mizoram and Arunachal Pradesh among the States and Chandigarh, Daman & Diu, Delhi, Dadra & Nagar Haveli and Lakshadweep among the UTs).

Q 7: What are the various crops covered under the scheme?
Ans.: The Scheme covers following crops
• Food crops (Cereals, Millets & Pulses): Some of the crops covered in various States are Paddy, Wheat, Jowar, Bajra, Maize, Ragi, Korra, Kodo- kutki, Green gram, Black gram, Red gram, Horse gram, Gram, Moth etc.
• Oilseeds: Some of the crops covered in various States are Groundnut, Sunflower, Soya bean, Safflower, Castor, Sesamum, Niger etc.
• Annual Commercial/Annual Horticultural crops: Sugarcane, Cotton , Potato, Onion, Ginger, Turmeric, Banana, Pineapple, Jute, Tapioca, Chilli, Cumin, Coriander, Isabgol, Methi etc.
The crops are selected for insurance if the past yield data for 10 years are available, and the State Govt agrees to conduct requisite number of Crop Cutting Experiments (CCEs) during the proposed season. At present there are 35 different crops during Kharif and 30 different Rabi season are being insured under National Agricultural Insurance Scheme in the country.

Q 8 : Who is eligible to be covered under the scheme? 
Ans: All farmers growing insurable crops and availing Seasonal Agricultural Operations (SAO) loans from Banks / PACS are compulsorily covered under the Scheme by the Banks/ PACS, whereas the non-borrowing farmers growing insurable crops can also avail the benefit of the Scheme by submitting  prescribed proposal forms at the nearest Banks/ PACS.

Q 9 : How is this scheme administered'?
Ans.: The Scheme is being implemented by Agriculture Insurance Company of India Limited (AICL) on behalf of the Ministry of Agriculture, through its Regional Offices located at 17 State capitals.

Q 10 : What is the Unit of Insurance?
Ans : The scheme operates on the basis of Area Approach i.e. defined areas for each notified crop for widespread calamities and in dividual assessment is done on experimental basis for localised calamities, such as, hailstorm, landslide, cyclone and flood in certain pre-notified areas. The size of unit area varies from State to State and crop to crop. Presently, the defined area is Block/ Mandal/ Taluka / Patwari halka / Nyayapanchayat/ Gram Panchayat/ Village, etc.

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