Even as the Maharashtra government extended the country’s biggest ever loan waiver package to cover an even greater number of farmers by including all overdue crop loans disbursed since 2009, farmers across the state are reporting their inability to access fresh credit.
Amid doubts over conditions imposed for eligibility for the loan waiver, and with the cooperative banking network in deep crisis, farmers have been unable to access any institutional credit more than a fortnight after Chief Minister Devendra Fadnavis announced that a fresh line of credit worth Rs 10,000 would be made available immediately to all eligible farmers. And with sowing for the kharif season already at the half-way mark, farmers in regions that have witnessed acute agrarian distress over the past three to four years say the fresh loan of Rs 10,000 may just come too late.
Nivrutti Gangurde of Kotamgaon village in Nashik’s Niphad taluka had earlier in the year taken a loan of Rs 2 lakh for his daughter’s wedding. Unable to raise a fresh crop loan as he was unable to clear previous dues, he had to borrow informally from somebody in the village, at higher rates of interest, for the kharif season. “I have been overdue since 2014 — none of the banks was ready to sanction any loan. In order to meet the operational expenses for my acre of tomato I had to borrow around Rs 2 lakh from a moneylender this year,” he says.
For Maharashtra’s farmers now, there is water but no liquidity In Tuljapur taluka’s Salgara Devti village in Osmanabad district, farmer and postwoman Archana Bhosale says everyone is being turned away from the local bank. Similarly, in Nandurghat village of Beed, local journalist and farmer Amol Jadhav says those visiting the Maharashtra Gramin Bank branch have been told instructions regarding fresh credit haven’t arrived yet.
Across the state, lead bank managers for agricultural loans say the fresh loan of Rs 10,000 promised by the government cannot be extended in the current circumstances where eligibility criteria have been repeatedly tweaked since the announcement and with no master circular from the Reserve Bank of India to all banks on writing off crop loan accounts that are non-performing assets (NPAs) or bad loans.
“The government and the RBI will have to clearly state which NPAs are to be written off, only then can fresh credit be offered. And banks have seen next to zero recovery ever since the loan waiver demand began to pick up. With nobody making payments on old loans and with no detailed intimation from the government on how to proceed, local banks actually cannot offer fresh loans to anyone, though there are requests every day,” says the lead bank manager in one of Marathwada’s districts. The Maharashtra Gramin Bank, a regional rural bank, is the only one to have issued a circular to its branches on the loan waiver and fresh credit, but sources say disbursals have remained very low despite demand.
The Gramin Bank services 17 districts, including all of Marathwada where the district central cooperative banks are mostly weak or defunct. Chief Manager for Credit and Refinance K D Joshi says a circular was issued as per the directives of the state government to all 408 branches, but concedes that there is confusion regarding eligibility. “The criteria are changing daily. Now all loans disbursed since 2009 that are overdue as of June 30, 2016 are eligible, but the government has not issued a circular about this. Until there is a firm eligibility criterion, some confusion will remain,” he told The Indian Express.
Other bankers say farmers are also a confused lot, some hoping to have multiple loans in multiple banks written off, others simply unaware of the conditions to be fulfilled before the mortgage record can be wiped clean from their 7/12 land extracts. Meanwhile, the distressed district central cooperative banks’ inability to service customers has added to the slow pace of farmers accessing fresh credit. The Nashik District Central Cooperative Bank (NDCCB) had, by the end of June last year, disbursed over Rs 1,200 crore in crop loans. Once known for its robust financial health, the bank has this year disbursed only Rs 61.41 crore — six per cent of its set target of Rs 1101.05 crore – till now. Chairman Narendra Darade blames the continuing impact of demonetisation for the situation. “We do not have cash with us. How are we to disburse money to farmers,” he asks.
The confusion and consequent glitches in extending fresh credit to farmers eligible for the waiver comes after an already slow crop loan season for Maharashtra’s banks. By the end of June 2016, of the Rs 37,677.03 crore target for kharif loans, banks had disbursed Rs 20,889.20 crore — a healthy 55 per cent of the target. However, by the middle of June this year, of the targeted Rs 40,547.20 crore, only Rs 9,249.22 crore had been disbursed — barely 23 per cent of the target. On expected lines, district central cooperative banks that disburse around 40 per cent of crop loans have been the worst performers. They have disbursed Rs 5225.94 crore, or 40 per cent of their target of Rs 13108.38 crore. At the end of June 2016, these banks had disbursed Rs 10,451.77 crore of their targeted Rs 13,113.57 crore — 80 per cent of the target.
Simultaneously, sowing has continued despite the crisis in institutional credit. With healthy water levels in dams and local water bodies, nearly 40 per cent of the kharif sowing is now complete, with over 56 lakh hectares of farm land already sown in anticipation of the promised normal monsoon. At this time last year, only about 13 lakh hectares of farmland had been sown. Villagers say many have turned to private moneylenders in the absence of farm loans from banks. Worse, in some parts of Marathwada, villages actually completed sowing, enthused by the June rainfall, and a dry spell since the end of June has many worried about the likelihood of having to undertake a second sowing, called ‘dubaar perni’, a chronic and crippling additional cost for farmers in rainfed and non-irrigated parts.
In Dhamangaon village of Ashti taluka, a drought-prone region, for example, a plentiful monsoon in 2016 has ensured there’s plenty of water for drinking. “But it hasn’t rained since the end of June. If it doesn’t rain in a week or 10 days, we will have to go in for a second sowing,” says deputy sarpanch Dr Syed Bashir. Dhamangaon’s farmers have sown urad, moong, bajra and cotton and are now concerned about the young crop’s health at a crucial growth stage.
With the weather office predicting a relatively dry July, farmers in Ashti expect they may have to sow a second time. “If the promised fresh loans are disbursed now, the money will at least be handy for that,” says Dr Syed. “If it comes much later, what’s the use?”
Minister of State for Agriculture Sadashiv Khot admitted to receiving complaints about non-disbursal of crop loans from various districts of the state. “I will be meeting the chief minister on Friday and ask him to look into the matter. I will also be requesting the district guardian ministers to take weekly meetings with the lead banks and follow up about loan disbursal,” he said. Khot signalled that banks who had failed to provide credit on time would face action.