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Since the start of the Covid-19 pandemic, agriculture was the only sector which has seen consistent positive growth. Two years down the line, agricultural finances in Maharashtra have actually seen an improvement with banks reporting lower Non Performing Assets (NPA). Bankers and agri finance experts said this was a combined reflection of the state government’s loan waiver scheme, better returns and improved credit behaviour among farmers.
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Short-term and long-term finances are extended to the sector by banks to help farmers in their farming activities. Short-term finance refers to the money extended to farmers at 7% rate of interest for 11 months. Called crop loan, farmers get an interest subvention from both state and central government to the tune of 5-6% which makes the effective rate of interest at 1% if repayment is done on time. Loans for agri infrastructure like drip irrigation, tractors etc are extended to farmers at the rate of interest which ranges from 4 to 9%. The latter has a longer period of pay out.
Being part of priority sector, lending to the agricultural sector is closely monitored by the State Level Banker’s Conference — the apex body of banks in the state. Minutes of the meeting, accessed by The Indian Express, showed that over the past two years, bankers have reported reduction in NPA in the sector.
Thus, on December 31, 2019, NPA in the sector stood at 19.29% and outstanding was Rs 1.39 lakh crore. A year later, ie December 31, 2020, NPA reduced to 18% and outstanding reduced to Rs 1.3 lakh crores. Agri NPA on December 31, 2021 saw further reduction to 17.79% and outstanding stood at Rs 1.79 lakh crores. Reduction in NPA percentage, bankers said, was a positive sign which showed repayment of loans on time and also repayment of old loans, said a senior banker on condition of anonymity.
Bankers pointed out that the Covid-19 pandemic coincided with the finalising of the Mahatma Jyotirao Phule Farm Loan Waiver scheme where loans worth Rs 20,000 crore was waived off for over 30 lakh farmers. This has affected those accounts being written off from the NPA accounts. Also, over the past two years, returns from crops like soyabean and cotton, which are staple in the state, have been good.
Overall, bankers said the farm sector has seen better financial discipline and thus NPAs have come down.
On his part, Yogesh Thorat, managing director of MahaFPC– the apex body of Farmers Producers Company (FPC) in the state — said reduction in NPAs was indication of better financial literacy and discipline among farmers. “Thanks to better returns, farmers are now regular in repayment which is reflected in the figures,” he said.
