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Maharashtra: Crop loan disbursal remains low, minister warns banks of action

For the last three years, banks in Maharashtra have reported low levels of financing to the agricultural sector. Repeated loan waivers and droughts had disturbed the credit cycle of the state, which had seen banks failing to meet the targets assigned to them to finance the farm sector.

Written by Parthasarathi Biswas | Pune | Published: July 5, 2020 8:54:08 pm
wheat, wheat crops, wheat procurement, wheat cultivation, indian express The Covid-19 crisis has put the brakes on the Mahatma Joytiba Phule Karj Mafi Yojana, 2020 even as the state government had instructed the banks to disburse loans to every farmer whose name was on the eligibility list. (File)

Slow pace of disbursal of crop loans, especially by the public sector banks, remains a concern even as farmers in the state have reported healthy sowing.

Agreeing to the problem, state Minister for Cooperation Balasaheb Patil said commercial banks have been instructed to speed up loan disbursal, failing which the “state government will take action as per the terms and conditions of the memorandum of understanding (MoU) drawn up with them”.

For the last three years, banks in Maharashtra have reported low levels of financing to the agricultural sector. Repeated loan waivers and droughts had disturbed the credit cycle of the state, which had seen banks failing to meet the targets assigned to them to finance the farm sector. The Covid-19 crisis has put the brakes on the Mahatma Joytiba Phule Karj Mafi Yojana, 2020 even as the state government had instructed the banks to disburse loans to every farmer whose name was on the eligibility list.

However, since the start of the Kharif season, crop loan disbursal has been slow to take off. Farmers require capital for seeds, fertilizers etc at the start of the cropping season, which banks provide at a subsidised interest rate of 7 per cent. Clubbed under priority lending, banks are mandated to lend to the farm sector so as to prevent them from turning to money lenders. State Level Bankers Committee (SLBC) – an apex body of bankers in the state – meets at the start of the season to fix the outlay for the state.

As against the Rs 45,694 crore target given to the banks for the present kharif, the financial institutions have managed to disburse only Rs 14,052 crore – 30.75 per cent of the target – to 24.92 lakh farmers. Surprisingly, the low disbursal comes even as the state reports healthy sowing over 60.56 lakh hectares. Usually, the state government reports sowing over 1.51 crore hectares during the kharif season.

The good pace of sowing, while welcome news for the farm sector, has also raised questions about where farmers were raising finance from. Scrutiny of data shows that district central cooperative banks have a better disbursal rate than the financially stronger commercial banks. Thus, while the former have disbursed 68.88 per cent of their target, the latter have (till June 15) disbursed only 15.16 per cent of their target. Patil told The Indian Express that slow pace of disbursal by the commercial banks was a cause of concern.

BJP MLA from Tuljapur in Osmanabad district, Ranajagjitsinh Patil, said the failure of banks to come farmers’ aid was throwing them in debt. “Some farmers can raise finance from their friends and relatives, while have to turn to local traders or money lenders and borrow money at very high rate of interest,” he said.

Patil said the state government has signed MoUs with the banks, who are obligated to provide loans. “The chief secretary of the state has already warned them of action if they fail to meet their targets,” he said. Senior officials said the government has warned of discontinuing business with banks if they failed to provide loans to farmers.

The BJP MLA blamed the government for not coming to the aid of farmers. “It was expected that they should take action to ensure farmers get credit at the right time, but they have failed miserably,” he said.

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