The Maharashtra government’s decision to provide crop loans at zero per cent interest rate to farmers with a ceiling of Rs 3 lakhs has veered farmers towards the banks. (Express File Photo)After three years of below-average lending, banks in Maharashtra have reported good lending to the agricultural sector this year. By the end of June, banks reported 66 per cent of their target lending for the current financial year, the highest in the last three fiscals.
Lending to the agricultural sector, both in the short term and long term, is included in the priority sector. Banks and financial institutions are given targets for lending to the priority sectors with the State Level Bankers Conference (SLBC) – the apex body of financial institutions – regularly holding meetings to oversee the lending. Financial institutions are given a target at the start of the year under the Annual Credit Plan (ACP).
The SLBC minutes of the meeting held earlier this month showed by the end of June 2022, banks, which were given a target of lending Rs 46,449 crore, managed to lend Rs 30,465 crore. The minutes said this was the highest in the last three financial years. Financial institutions had reported 53 and 59 per cent lending of their targets respectively in the last two years.
Analysis of the data shows that scheduled commercial banks (SCB) have shown a healthy increase in their lending. For the current fiscal, the SCBs achieved 53 per cent of their target which for 2021 and 2020 fiscals was 41 and 38 per cent. But, district central cooperative banks have actually shown a reduction in their lending. By the end of June 2022, these banks managed to lend 88 per cent of their target which was lower than the 92 and 90 per cent outlays by the end of June 2021 and June 2020 respectively. Cooperative banks have always outperformed the SCBs in terms of credit lending thus this dip in disbursement points to systematic problems in the cooperative credit structure.
Bankers who spoke to The Indian Express said repeated loan waivers freed up many non-performing assets (NPA) accounts that had otherwise dropped out of the net of organised credit had got back into the banking system. Also, good monsoons and ample rains helped farmers go for credit from the banks. Commodity prices have been robust which has helped many farmers repay their crop loans. The state government’s decision to provide crop loans at zero per cent interest rate to farmers with a ceiling of Rs 3 lakhs has veered farmers towards the banks.