02-07-2025
Rural banks struggle to recover short-term crop loans as farmers wait for Mahayuti to fulfil waiver poll pledge
Kolhapur: Mahayuti's farm loan waiver promise before the assembly poll has hit rural banks hard, with farmers holding off on loan repayments in anticipation of debt waiver. As of May 31, a staggering 55.46% of short-term crop loan dues remained unpaid across Maharashtra's 31 DCC banks.
In the 2024 kharif season, banks in Maharashtra disbursed Rs 40,628 crore in crop loans, primarily those short-term with an 11-month repayment tenure, benefiting 39 lakh farmers. However, preliminary figures accessed from individual District Central Cooperative (DCC) banks and the cooperation department ahead of the June 30 repayment deadline for short-term loans revealed a dismal recovery picture as of May 30, with no notable improvement.
Satara DCC bank leads in loan recovery, yet faces a 2% drop in repayment of short-term crop loans, having disbursed Rs 1,800 crore in recoverable loans. Bank's CEO Rajendra Sarkale said, "Last year, around 98% of loans were repaid. By June 30 this year, we have recovered around 96%. The dues are mainly from the drought-prone areas like Man and Khatav tehsils."
In March, deputy CM and finance minister Ajit Pawar had appealed to the farmers to repay crop loans highlighting the financial strain.
Following this, the banks conducted meetings with primary agriculture societies, informing farmers that failing to repay loans by June 30 would result in losing interest subvention benefits, making their loans interest-free no longer, and instead charging 10.50% interest.
Subsequent statements by CM Devendra Fadnavis and deputy CM Eknath Shinde, however, made the farmers to hold off on repayments. CM Fadnavis said, "We won't go back on any promise.
Farm loan waiver implementation has rules and procedures. The decision will be made at the right time." Adopting the same stance, Shinde said, "We're committed to farm loan waiver, but need time to study it. We'll appoint a committee to examine the demand.
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In the case of Kolhapur DCC bank, chairman Hasan Mushrif, who is also a state cabinet minister, said the bank was expecting the recovery of 97-98% of total Rs 2,587 crore recoverable loan.
It, however, ended short of Rs 255 crore. "Loan-waiver rumour led farmers to withhold payments, limiting our recovery to 90%. Govt is seriously considering loan waiver, as announced by CM Fadnavis. However, we in the cooperative sector believe timely loan repayments should qualify farmers for waivers.
We'll work towards this, as defaulting shouldn't be seen as the only way to benefit from waivers, which could harm banks and credit societies," Mushrif said.
Sangli DCC saw a 5% drop in short-term crop loan recovery, with 75% of loans recovered till June 30, up from 68% at May-end. Due to a Rs 490-crore shortfall, bank's chairman Mansingrao Naik extended the repayment deadline to July 5. Farmers missing this deadline will receive a recovery notice under Section 101 of the Maharashtra Co-operative Societies Act, 1960.
Nashik DCC bank disbursed Rs 411.30 crore in crop loans, of which Rs 207 crore is due.
With an outstanding of 77% on short-term crop loans, Nashik DCC bank ranks among the top banks with poor recovery rate. "We have restructured the loans with lower interest rates to encourage the farmers to pay the dues. For instance, the dues of Rs 1 lakh will incur just 2% interest, and for Rs 1-5 lakh, it will incur just 5% interest," Nashik DCC bank administrator Santosh Bidwai said.
Vijay Autade, a cooperative sector expert, said, "The poll promise made farmers hopeful. Besides, the farmers believe that if they pay the loans, they will not be eligible for a waiver. Govt brought a scheme to incentivise the farmers paying loans regularly. However, three years down the line, many farmers have not received the amount. The primary agriculture credit societies bear the brunt at the end, as they are left with less cash flow to disburse new loans.
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