Farmers in Vidarbha Turn to Moneylenders as Banks Deny Crop Loans

Commercial Banks Defy Government Orders, Leaving Farmers Struggling

Mumbai: Farmers in Vidarbha are increasingly turning to moneylenders as commercial banks flout state government orders to provide crop loans without demanding CIBIL scores and other documents. Despite the directive from Chief Minister Eknath Shinde, many banks have only disbursed 30 percent of the crop loans, pushing 60 percent of Vidarbha's farmers towards high-interest moneylenders.

Government's Efforts and Bank's Response

Following Chief Minister Shinde's order, cooperative banks swiftly began distributing crop loans to meet farmers' demands. However, commercial banks have been resistant, insisting on CIBIL scores despite central and state government decisions against this requirement. The Chief Minister had warned in a state-level bankers committee meeting that legal action would be taken against banks obstructing loan distribution, but this warning has had limited impact.

Loan Distribution Targets and Performance

For the current kharif season, district central cooperative banks were set a target of disbursing ₹18,375 crore in crop loans. By July 15, they had achieved 89 percent of this target, distributing ₹16,361 crore to 21.44 lakh farmers. Pune division banks exceeded their targets, and Gramin Banks disbursed 82 percent of their target loans to three lakh farmers. In stark contrast, commercial banks have disbursed only 30 percent of their crop loan targets.

Specific Bank Performance and Challenges

The State Level Bankers Committee set a target of ₹30,777 crore in crop loans for commercial banks, aiming to assist over 27 lakh farmers. To date, these banks have only distributed ₹9,245 crore to 5.51 lakh farmers. Leading banks like Yes Bank, RBL, Federal, UCO, Punjab Bank of Maharashtra, and Bank of India have contributed, but many other banks show little interest in supporting farmers.

Turning to Moneylenders

Faced with obstacles from commercial banks, many farmers are forced to seek loans from moneylenders. The state has 12,490 registered moneylenders who can charge interest rates of 9 percent (collateral) and 12 percent (uncollateral) for crop loans. Additionally, non-agricultural loans can legally incur interest rates of 15 and 18 percent. So far this season, nine lakh farmers have taken non-agricultural loans totaling ₹2,056 crore, and crop loans amounting to ₹57 lakh. Notably, 5.27 lakh of these farmers are from Vidarbha.

Government's Next Steps

Minister of Co-operation Dilip Valse-Patil stated that commercial and public sector banks must adhere to the loan distribution targets set by the state-level bankers committee. The government plans to file complaints with NABARD regarding the obstructive practices of commercial banks. In Vidarbha, where district banks are struggling, farmers face significant challenges obtaining loans from commercial banks, further driving them to rely on moneylenders.