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Tuesday, June 02, 2020

Drought effect: 43% jump in bad loans in farm sector last year

The highest jump in bad loans is in the crop loan segment where NPAs has grown by 66 per cent and the figure stands at Rs 2,273 crore.

Written by Avinash Nair | Ahmedabad | Published: June 7, 2019 1:02:37 am
Explained: Why farmers are not cheering Punjab’s fuel price cut the agriculture term loans also shot up by 31 per cent to Rs 3,417 crore by March 2019 in the state. (Representational Image)

Bad loans in the agriculture sector in Gujarat has grown by 43.25 per cent during the financial year that ended March 2019. With farmers struggling to pay back their loans in a drought year, banks have restructured over 4,400 accounts in 51 talukas that have been badly affected by water scarcity.

The State Level Bankers’ Committee – Gujarat that met for the first time after the amalgamation of Bank of Baroda, Vijaya Bank and Dena Bank, stated in the report released Thursday that the gross NPAs or Non-Performing Assets in Gujarat grew to Rs 38,602 crore which was 6.54 per cent of the total loans extended by the banks in the state. In March 2018, this figure stood at Rs 35,220 crore.

The highest jump in bad loans is in the crop loan segment where NPAs has grown by 66 per cent and the figure stands at Rs 2,273 crore. The percentage of NPAs in this segment stood at 4.92 per cent of the total outstanding amount. Similarly, the agriculture term loans also shot up by 31 per cent to Rs 3,417 crore by March 2019 in the state. The percentage of NPAs among agriculture term loans was phenomenally high at 9.24 per cent. “Normally we don’t see this sort of high NPAs in the agricultural sector. But this time there is a little stress in this sector, pan-India,” said Vikramaditya Singh Khichi, executive director of Bank of Baroda (BoB) who chaired the meeting.

In order to ensure that the quantum of NPAs in the farm sector do not rise significantly, the banks have restructured and rescheduled 4,482 loan accounts amounting to Rs 43.29 crore in the 51 talukas in 11 districts of the state where the state government declared drought in October 2018. “These account holders would not be able to repay on time because of lack of cash flow. So, they have been given a moratorium till the next crop season,” Khichi said.

The stress in the Gujarat’s farm sector also reflected in the quantum of loans disbursed by the banks during the year 2018-19. “The agriculture advances clocked a retarded growth of 4.62 per cent and it stood at just 15.42 per cent of the overall advances, against a mandatory target of 18 per cent,” Khichi added.

Among the individual banks, the percentage of gross NPAs of Allahabad Bank almost touched 40 per cent in Gujarat. Similarly, Indian Overseas Bank had a gross NPA of 32.5 per cent, while Bank of Maharashtra had an NPA of 27.3 per cent at the end of March 2019. Among the small finance banks, Jana Small Finance Bank Ltd had an NPA of 33.5 per cent.

Crop Insurance: ‘Rs 2,050 cr given to 10.51 lakh farmers’

* Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), Rs 2,050 crore has been disbursed as claims to over 10.51 lakh farmers in Gujarat in 2018-19, sources said after the end of the State Level Bankers’ Committee (SLBC) meeting held on Thursday. Bankers who participated in the meeting said, a total of 17.5 lakh farmers were covered under the PMFBY, covering an area of 26.08 lakh hectares of the state during 2018-19. During this period, a total of Rs 3,137 crore was paid as premium to insurance companies under the scheme. ENS 

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