The government scheme: PMFBY & UPIS explained (as per the standard syllabus) for Bank Promotion Exams 2024. 

The journey of a thousand miles begins with one step! You must have heard of this quote & we are here to help you to take that one step. So, let’s get started!!

The persons who are reading this article & are going to write the bank’s promotion exams in 2022 are right on track. Here, we will provide you with some short notes which will help you remember the PMFBY scheme of the government. It will help you successfully clear your bank’s promotion exam this 2024. whether you are working in SBI, BOI, PNB, or any other public sector bank!

Pradhan Mantri Fasal Bima Yojana (PMFBY)

  • It is a comprehensive insurance cover which protects the farmers against the failure of crops to help them stabilize their income. The purpose is to encourage the farmers to adopt innovative practices in the field of farming.
  • This Fasal Bima Yojana covers almost all the crops related to food and oilseeds. It also covers the annual commercial or horticultural crops whose data related to the past yield is available & for which a given number of CCEs (crop cutting experiments) will be conducted as a part of GCES (General Crop Estimation Survey).
  • Compulsory: A farmer taking a loan i.e crop loan for Kisan credit card (KCC) from the bank is also required to take up the scheme for some notified crops while it can also be voluntarily be taken up by the other farmers who have an insurable interest in the crop they want to insure, irrespective of the fact whether they have taken a loan from the bank or not. 
  • The maximum premium which is required to be paid by the farmers has been fixed as per the following table: 
All Kharif Food & Oilseeds crops 2%
Rabi Food & Oilseeds crops 1.5%
Annual Commercial/Horticultural Crops 5%


  • Government subsidy: Central government and state government will also be sharing, equally, any difference between the premium charged and the rate of insurance charges that are payable by the farmer for this scheme.
  • Implementation of the scheme: This scheme is implemented by AIC (referred to as implementing agency (IA)) & some other private general insurance companies which have been impaneled for the purpose. This IA is selected by the concerned state government through bidding. 
  • No. of IAs: In case the state is small, the responsibility for implementing the scheme will be assigned to only one implementing agency while the largest States usually have two to three implementing agencies. The selected IAs can be made for at least three years.
  • Bidding by IAs: Companies which have been impaneled and are participating in the bidding process have to bid the premium rates for all the crops which have been notified or will be notified by the state government i.e. they cannot leave anyone or more crop out from bidding. If they do so, it would amount to non-compliance and the company’s bid will be rejected.
  • Basis of Implementation: This scheme is required to be implemented on an area approach basis i.e the unit of insurance for:

Major crops – village/ village panchayat level

Other crops – ‘ a unit of size’ above village/ village panchayat level

  • Responsibility of Management: The responsibility of managing this scheme lies on: 

Existing State Level Co-ordination Committee on Crop Insurance (SLCCCI), Sub-Committee to SLCCCI, 

District Level Monitoring Committee (DLMC) 

  • Indemnity claims: If in a notified area, a majority of crops that have been ensured are prevented from sowing or planting because of adverse weather conditions, the farmers can claim up to 25% of the sum that has been insured.

Farmers can also claim the losses that happen on account of adverse seasonal conditions such as severe drought, floods, and unseasonal rains.

Claim amount up to 25%: The claims are likely to be provided if the expected yield is going to be < 50% of the normal yield.

  • Assessment of loss: For the assessment of loss that happens because of natural risks which could not be prevented – will be done based on the area approach. But the loss which has been incurred due to localized peril, for example, hailstorm, landslide, or inundation & losses which happen post-harvest because of some specified perils such as cyclone, cyclone rain, or unseasonal rains – will be assessed at the insured field that has been affected.

Improved Technology such as remote Sensing drones can also be used to estimate yield losses.

  • Levels of indemnity: Three levels i.e 70%, 80%, and 90% corresponding to risks are to be available for all the crops.
  • Threshold Yield (TY):  It is the benchmark level of yield at which insurance protection under this scheme shall be given to only farmers who have insured their crops.

This TY = moving average of yield of last 7 years (excluding yield up to 2 notified years of calamity) X indemnity level.

  • Crop Cutting Experiments (CCE): As mentioned earlier in the above paras, crop cutting experiments are required to be undertaken per crop/unit area, on a sliding scale, as per the guidelines of the scheme. 

To capture the process and transmission of CCE data on a real-time basis, state governments can also use smartphone applications for this purpose. It helps in the reliable and transparent estimation of yield data.

The cost to conduct these experiments using the technology will be shared between the central government and the state governments on an equal basis.

  • The claim of credit: The claim amount is electronically transferred to the individual’s bank account.
  • Publicity of this scheme: Sufficient advertisement has to be done in the villages which have been notified so that farmers can take benefit of this scheme.

Unified Package Insurance Scheme (UPIS)

UPIS i.e Unified Package Insurance Scheme is to be implemented through a single window in a total of 45 districts as a pilot project. The intention is to provide financial protection and coverage against comprehensive risk to crops, assets, life & safety to farmers.

One of the great features is that the farmers will be able to get all the insurance products which are required by them in one proposal or application form.

It will also include the two flagship schemes of the government i.e PMSBY & PMJJBY.

This pilot scheme will include 7 sections: 

  1. Crop Insurance (PMFBY/WBCIS) is compulsory while the farmers are free to choose at least 2 sections from the remaining sections, 
  2. Loss of Life (PMJJBY), 
  3. Accidental Death & Disability (PMSBY), 
  4. Student Safety, 
  5. Household, 
  6. Agriculture implements & 
  7. Tractor.

Processing of claims: For the claims other than on crops will be processed based on individual claim reports.

We hope that you would have found this article easy to understand and go through. We have tried our best to place related terms next to each other so that there can be an easy flow of understanding.

We also have some other free notes from the syllabus of bank promotion exams 2022. You can find them on our website through the search box.

All the best for your Bank Promotion Exams!!

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