The Full Form of ‘VCP’ in Banking is ‘Village Credit Plan’.
Full Form of VCP
The full form of VCP in banking is ‘Village Credit Plan’, and it is a system of providing credit to rural communities. It is a programme implemented by the Government of India to provide access to financial services to people living in rural areas who are unable to access conventional banking services.
The main objective of the Village Credit Plan (VCP) is to provide a stable source of income for the disadvantaged sections of rural populations, such as small farmers, artisans and other self-employed persons. This plan will increase their purchasing power, thus helping them to lead a better life with improved standards of living.
Under this programme, banks and other financial institutions provide loans at preferential rates, which are generally lower than those available in the market. These loans are provided in the form of working capital finance or term loan finance for agricultural activities like animal husbandry, poultry farming etc., purchase of land and equipment for farming operations etc.
In order to avail these loans, applicants must meet certain criteria such as having an annual income less than Rs 20 lakhs per annum; being engaged in agricultural activities or any other type of business activity; having an account with a bank or post office; having minimum educational qualification; and having a valid proof address.
The Village Credit Plan also provides incentives such as interest subsidy on loan amount up to certain limits and waiver on processing fees and repayment penalty charges when availed under this scheme. Such incentives help borrowers save money on loans taken from banks and other financial institutions under this scheme.
The VCP has been quite effective in providing better access to credit for rural population since its inception in 2002-03. As per reports from National Bank for Agriculture & Rural Development (NABARD), there has been substantial growth in credit disbursed under VCP between 2013-14 & 2017-18 – from Rs 539 crore to Rs 807 crore respectively during this period. Thus it can be concluded that VCP has made significant contributions towards economic development and poverty reduction among rural population over last decade or so.
To conclude, Village Credit Plan (VCP) has proved extremely beneficial in bridging the gap between urban & rural populace by making credit available at reasonable rates even at remote locations where conventional banking facilities may not be present or may not be accessible due to various logistical constraints. The efforts put forth by Government of India have made sure that no one gets left behind when it comes accessing basic financial services needed for livelihood security & socio-economic development.
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