Tamil Nadu: Lion’s share of bank loans against gold, villages fall prey to loan sharks

While the agriculture portfolio of SBI grew from Rs 8,510 crore in March 2011 to Rs 18,528 crore in March 2015, the entire growth has been on account of agriculture gold loans, for which banks take gold guarantees, rather than through core agriculture business loans, disbursed through Kisan Credit cards — as per a public paper prepared by a state-level bankers’ committee.

With 4,408 ATMs and 1,032 branches, SBI is the largest bank in Tamil Nadu.

Banks prefer gold loans as there is some surety in the form of gold. Agriculture business loans include both direct agriculture loans and loans for allied agriculture sectors such as processing or to purchase water bottling equipments or create storage facilities.

The same holds true for all major banks. SBI Chief General Manager, Tamil Nadu region, Ramesh Babu did not respond to queries sent by The Indian Express.

Quoting the RBI’s Basic Statistical Returns (BSR) data, D Thomas Franco, the leader of the All India Bank Officers Confederation, India’s largest bank officers’ body, says that as of March 15, of the total bank credits, the under-Rs 25,000 loans made up just 0.5 per cent and loans below Rs 2 lakh only 7.7 per cent. “Whereas, 11,000 borrowers have got 31.5 per cent of the total loans in India,” he says, slamming the disparity in the loan system.

S Nagoor Ali Jinnah, Chief General Manager of the National Bank for Agriculture and Rural Development (NABARD), agrees with Franco that a target should be set by the RBI for core agri business loans. “These are the actual agriculture loans that reach farmers,” Franco says.

Says Jinnah, “The rule (the RBI’s) says that 18 per cent of the total lending of a bank should be to agriculture. But unless the RBI makes it mandatory for all banks to give a certain percent as core agri business loans, banks can easily get away with maximum agri gold loans to meet that 18 per cent.”

Jinnah also talks about the falling GDP from agriculture in Tamil Nadu. “It stands at 6 per cent now… This is in a state where 40 per cent of the population is dependent on agriculture for their livelihood.”

In Chandiran’s village, many Dalits such as him, traditionally landless, had became landowners a decade ago when a freedom fighter and former aide to Mahatma Gandhi, Krishnammal Jagannathan, convinced a few landlords to part with their land for Dalit women at cheap rates. Jagannathan’s movement helped free over 1,000 acres of land in Nagapattinam and Cauvery delta regions.

A seniormost SBI official in Chennai says that apart from loans, banks should promote area development schemes for farmers, such as irrigation projects and other allied agriculture works.

Such help is crucial given the findings of a recent study that the average size of land holdings in Tamil Nadu is only 0.80 ha, while per capita availability of land in Tamil Nadu is 0.19 ha. The per capita availability of net sown area is only 0.10 ha.

The study by the Centre for Agricultural and Rural Development Studies (CARDS), that falls under Tamil Nadu Agriculture University (TNAU), also shows that the share of marginal and small farm holdings in Tamil Nadu increased from 89.9 per cent in 2001 to 91.75 per cent in 2011, while that of semi, medium and large holdings declined significantly.

Census data of 2011 shows a 17.74 per cent increase in worker population since 2001, indicating a crucial shift from farms as productivity fell.

At Sattiyakkudi village near Thiruvarur, farmer S Prakash is waiting for a bus to take him to Thanjavur, having failed to raise a bank loan. “From Thanjavur, I will go to Perinthalmanna in Kerala to work as a jeep driver,” he says, adding his friends earlier left, for Tirupur or Chennai or Bengaluru.

Seeing him off is G Panneerselvam, 60, who had hired Prakash to operate his tractor, before his fields spread over 70 acres too dried up. Panneerselvam says he wishes he could leave too. “I have nothing left to cultivate this year. But I can’t leave my family and land behind.”