Almost two years after Chief Minister Devendra Fadnavis announced Rs 34,000-crore farm loan waiver, District Central Cooperative Banks (DCCBs) seem to have benefited more than the nationalised banks under the scheme. The DCCBs have reported lower outstanding farm credit, even as nationalised banks have shown an increase in the amount.
Under the Chhatrapati Shivaji Maharaj Shetkari Sanman Yojna, announced in June 2017, pending crop loans up to Rs 1.50 lakh were to be waived for individual farmers, while an incentive of Rs 25,000 was announced for those who repay their loans regularly. Initially, the scheme was to be implemented for loans pending from 2009 onwards, but later the time period was extended to include loans pending since 2001.
As per the government scheme, farmers can avail 11-month crop loan from finance institutions at 6 per cent interest. Timely repayment will further qualify a farmer for 3 per cent interest subvention from the Centre and a similar 2 per cent subvention from the state – thus the actual interest rate payable becomes just 1 per cent. This capital is usually
used by farmers for investment in seed and other agricultural inputs.
Failure to access loans from banks force farmers to turn to private money lenders, who charge around 10-15 per cent interest. Failure to repay these loans usually pushes a farmer into a debt, which experts have singled out as a primary cause of farmer suicide.
Till date, pending farm credit of Rs 18,062.07 crore, out of the total Rs 43,074.01 crore, have been waived in Maharashtra. The slow progress in loan waiver has affected disbursal of fresh farm credit in the last two years.
According to the data provided by State Level Bankers’ Committee (SLBC) – a state-level panel of institutional lenders and government offices which monitors the flow of credit to priority sector — the 31 DCCBs fared better in terms of implementation of the scheme. Till December 31 last year – the end of the third quarter of 2018-19 fiscal – outstanding farm credit for DCCBs stood at Rs 25,182.62 crore. The amount stood at Rs 30,692.49 crore during the same period in the previous fiscal.
Meanwhile, Scheduled Commercial Banks (SCB) reported Rs 88,506.84 crore outstanding crop loan on December 31, 2018 — it stood at Rs 85,372.03 crore at the end of the third quarter of the 2017-18 fiscal. The relatively better performance of cooperative banks was recorded even when SCBs had received more funds in terms of the waiver.
Data from the Department of Cooperation, Government of Maharashtra, which has been accessed by The Indian Express, shows that as of February 22, a total of Rs 9,843 crore pending loan was waived for SCBs, while the figure for the cooperative banks stood at Rs 8,219 crore. Vijay Ghonse Patil, managing director of Osmanabad District Cooperative Bank, said the bank has received a total waiver worth Rs 89.41 crore.
While this has helped the bank in the short-term, Ghonse Patil is apprehensive of the effect of this scheme in the long run. “Regular repayment attracts an incentive of Rs 25,000, while pending loans of Rs 1.50 lakh is waived. We fear now regular payees will willfully default to get a better deal,” he said.