As lending by rural banks dips, farmers turn to moneylenders in Maharashtra

As the state government prepares to present its Budget on Friday, around 20,000 farmers have started on a “long march” from Nashik to Mumbai to draw attention to their plight. Organised by the All India Kisan Sabha, they plan to gherao state Assembly.

Written by Partha Sarathi Biswas | Pune | Published: March 9, 2018 4:47:55 am
farmers turn to moneylenders in Maharashtra The massive Long March of the Maharashtra unit of the All India Kisan Sabha (AIKS). Express photo by Prashant Nadkar

Maharashtra’s agrarian distress, it seems, shows no signs of abating. The latest worry for the state government is the issue of lending by private moneylenders, which seem to be growing at an alarming rate. According to the Economic Survey of the state, lending by private moneylenders has seen a whopping 28 per cent increase in the last one year even as credit by cooperative banks show a significant dip.

Since the enactment of the Maharashtra Money Lending (Regulation) Act 2014, the state government keeps a tab on lending by private moneylenders through issuance of licences. The commissionerate of cooperation, which issues such licences, also keeps a tab on lending and repayment by such private players. Private moneylenders generally are the go-to person in rural areas, where access to institutional credit is low.

The survey, which was published on Thursday, notes a significant rise in lending by such players. As of March 31, 2017, 10,95,701 loanees availed loans worth Rs 1,614.76 crore from private moneylenders in the state. This was a 28.7 per cent increase from the Rs 1,254.97 crore lent by private players by the end of March 2016 when 10,56,273 loanees had turned to them. Interestingly, there has been no significant increase in the number of licensed moneylenders in the last two years with 2017 noting 12,214 active licences against 12,208 licences by the end of March 2016.

The increase in lending by non-institutional players comes in the backdrop of a dip in lending by both commercial and cooperative banks. Figures in the Economic Survey show scheduled commercial banks disbursed 124.9 per cent of their targets for agriculture and allied sectors in 2016-17 but, till September 2017, they had disbursed just 33.6 per cent of their targets for the current financial year. In the cooperative sector, the picture is equally worrisome as the 31 district central cooperative banks (DCCBs) have been recording a steady dip in their loan outlays. As against the Rs 44,231-crore loans disbursed by these primarily rural banks by March 2015, just Rs 43,368 crore was disbursed by them till March 2017.

If agricultural credit from financial institutions have seen a dip, the default in this sector has seen a rise. Thus SCBs, which had reported Rs 252.1 crore outstanding by the end of financial year 2015-16, reported Rs 280.5 crore outstanding by March-end 2017. The defaults have been larger in the cooperative sector, which reported outstanding of Rs 48,946 crore by the end of financial year 2016-17 as against Rs 47,454 crore by March 31, 2016.

Kishore Tiwari, head of the state government’s committee on farm distress, said these figures bring out the slow but steady collapse of institutional lending in rural areas. “People are turning to private moneylenders as banks are turning them away,” he said. Tiwari fears an increase in farmer suicides as more and more farmers approach moneylenders in desperation. “The credit policy reform has just remained on paper,” he said.

Maharashtra saw an unprecedented farmers’ strike last June when farmers came out on roads to demand a full farm loan waiver. That strike prompted Chief Minister Devendra Fadnavis to announce the Chhatrapati Shivaji Maharaj Shetkari Samman Yojana, which was to see waiver of Rs 1.5 lakh and incentive of Rs 20,000 for accounts which were regular. A total of 47,46,222 farmers had applied for the scheme and, by the end of December 2017, Rs 10,913.28 crore had been credited to loan accounts of 27,13,055 farmers.

As the state government prepares to present its Budget on Friday, around 20,000 farmers have started on a “long march” from Nashik to Mumbai to draw attention to their plight. Organised by the All India Kisan Sabha, they plan to gherao the state Assembly. All India Kisan Sabha’s Ajit Nevale said more and more farmers were falling off the net of institutional finance and this would have a long-term effect in the days to come.

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