‘Farmers hoping for waiver defaulting on crop loans’

Nagpur. Bankers asked for suggestions on achieving $5 trillion economy have raised concerns about rising crop loan defaults in the region. The public sector banks were directed by finance ministry to hold a month-long consultation process and get inputs from branch level on how to take the economy to $ 5 trillion level in five years.
As the meetings concluded in Vidarbha and other parts of state last week, bankers raised concerns about unpaid crop loans. Senior bankers who coordinated the consultation process said more than providing inputs on economic growth, the staff flagged issue related to crop loans. The bankers said many farmers were preferring to hold back the repayment in the hopes of getting another waiver.
The inputs were discussed at the state level bankers committee (SLBC) that held a meeting last week. SLBC will further put up the inputs to central offices.
The point was raised in meetings held by almost every PSU bank that has a sizable market share in the region, said sources. Senior officials of five major PSU banks shared the information with TOI.
“It was a common input that farmers were not repaying crop loans hoping there would be another waiver. We have been trying to convince them that delaying repayment would only hamper their prospect for getting fresh loans,” said a banker.
“We have also come across cases where farmers have been repaying other debts like term credit taken for buying farm assets or home loans but not paying back the crop loans,” said a senior banker requesting anonymity.
Crop loans are yearly short-term credit provided to farmers for meeting sowing expenses. A majority of farmers in the state avail these loans. The defaulting borrowers include those who have other sources of income. Some are employed as teachers but even such borrowers are avoiding repayment, said the source.
The state’s waiver scheme covered farms loans granted up to 2017. One lending cycle has passed after that and once again banks have been left with huge defaults. A banker said nearly half the loans disbursed by his organization’s branches in 2018 had not been repaid.
“The farmers seem to be confident there will be a waiver. Even banks’ employees do not insist on repayment, added a source in another PSU bank.
Despite the waiver, it appears a considerable number of farmers have been left out. The scheme waived loans up to Rs1.5 lakh entirely. A number of farmers have availed loans from different banks due to which the cumulative amount owed by them does not fit within the Rs1.5 lakh bracket, sources said. Concerns were raised about the connectivity problems dogging the rural banks too.