Maharashtra: Banks meet only 27% of kharif credit target in Q1
Of the total crop credit target of Rs40,547 crore set for the kharif season in Maharashtra, banks have disbursed just Rs11,034 crore
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Mumbai: Institutional lenders have met only 27% of their total crop credit target in Maharashtra for the current kharif season, data released by the Pune-based State Level Bankers’ Committee (SLBC) says.
Of the total crop credit target of Rs40,547 crore set for the kharif season in Maharashtra, banks have disbursed just Rs11,034 crore to more than 1.6 million farmers in the quarter ended 30 June.
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According to Ahilaji Thorat, SLBC member secretary and deputy general manager of Bank of Maharashtra, this amount is around half what was disbursed in the year-ago period. “Till the corresponding date last year, banks had extended around 55% of their kharif target. The disbursement has been low though the banks have been given funds as per their targets,” Thorat said in a phone interview.
The lenders include public and private sector banks, district co-operative banks and regional rural banks—those whose loans to farmers have been waived with certain riders by the Maharashtra government. Low recovery of the previous season’s debt, the government’s farm loan waiver and lack of clarity over the eligibility criteria are all being cited by bankers to explain the low levels of credit disbursement.
S.P. Sathe, deputy general manager at Nabard’s (National Bank for Agriculture and Rural Development) regional office in Pune, said the disbursement would gather pace now as loan waiver conditions have been clarified and a government resolution to this effect has been issued. “In a normal year, the credit disbursement is much higher than this season but since repayment of previous debt was low due to loan waiver uncertainty, not many farmers had become eligible for fresh credit. But there is much clarity now and banks will achieve their targets,” Sathe said.
District-wise figures are worse. In Nashik district, which saw a fierce farm protest in June, only 11% of the targeted Rs2,806 crore has been disbursed. The Nashik District Central Co-operative Bank (NDCCB) which has a kharif target of Rs1,101 crore disbursed only 6%. “We could recover only Rs156 crore of crop loan against the disbursement of Rs1,200 crore. Farmers have shifted to banks which are giving them loans at 6% interest as against the 11% that we charge,” said chairman of the NDCCB, Narendra Darade.
On 24 June, Maharashtra chief minister Devendra Fadnavis declared a Rs34,022 crore loan waiver that he claimed would benefit 8.9 million farmers indebted since 1 April 2012. Later, the government expanded the scheme to include farmers indebted since 2009. The loan waiver has several components and conditions that bankers say have confused farmers and slowed down credit disbursement. “The government resolution on loan waiver was issued on 28 June. There have been quite a few changes in conditions and coverage. June was a bad month for farmers and banks to figure out the practical meaning of these conditions. I am not surprised that loan disbursement is severely affected,” said a senior official from a public sector bank requesting anonymity.
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Thorat said farmers normally renewed their crop loan accounts before June by completing the repayment of outstanding debt and withdrawing fresh credit. “The new kharif season begins in June but till June-end, there was uncertainty over loan waiver. So the repayment of outstanding debt and fresh credit disbursement both suffered,” Thorat said.
The regional break-up of farm loan disbursement paints a gloomier picture. In Marathwada, which had a good monsoon in 2016 after two successive droughts, only 12% of the target has been achieved. In absolute terms, little more than 300,000 farmers in eight districts of Marathwada have been disbursed crop credit of Rs1,358 crore till 30 June against the target of Rs10,908 crore. In Vidarbha, another drought-prone region, the percentage of crop loan disbursement is 26% (Rs2,731 crore against the targeted Rs10,375 crore). Both Marathwada and Vidarbha are Maharashtra’s prime farm regions for crops like cotton, cereals, pulses, oilseeds, and sugar cane.
The scenario is slightly better in western Maharashtra at 36% (Rs6,633 crore against the targeted Rs18,389 crore) and 35% in Konkan (Rs3,099 crore against Rs8,743 crore). “The disbursement is higher in western Maharashtra because loan recovery there has been better as compared to Vidarbha and Marathwada,” a co-operation department official said, requesting anonymity.
Shridhar Upadhye, manager, crop loans at Kolhapur District Central Co-operative Bank, said the bank had disbursed Rs418.95 crore till 30 June. “Though recovery is generally better in western Maharashtra, even our recovery dropped to 80% this year from 92% in 2015-16 due to loan waiver speculation,” he said.