The Hindu Business Line : Fresh farm loans yet to flow; recoveries tardy

Wardha, July 9 The recent mega farm loan waiver by the Union Government has led to discontentment among farmers who are regular in repaying their loans in places such as Vidarbha in Maharashtra.

The Vidarbha region, which saw a spate of farmer suicides in the last few years, now appears totally fragmented, with loan defaulters on one side and regular repayers on the other, so much so that loan recoveries have come to a standstill there. The latter group says the Government has ignored them and rewarded the defaulters.

Almost a month after the monsoon set in, no fresh loans have been disbursed as the banks are waiting for the completion of the waiver process to extend fresh advances.

Farmer associations say it could take at least two months to obtain fresh loans and this could lead farmers back to loan sharks.

Vulnerable position

Bankers confirmed that the loan repayment for farm loans had come to a complete halt. Dr Madhukar N. Gumble, Executive Director, Apeksha Homoeo Society, which works with Nabard in five villages of Amravati district in Vidarbha, said the farmers were divided and unscrupulous elements were advising farmers to hold on and wait for a waiver rather than repay their loans.

Seventy-five-year-old Mr Bimrao Pote, a farmer in Kutki village in Wardha, said that despite all hardship, he had been repaying his dues but was excluded from the waiver process as he possessed six acres of land. “Now, tell me why should I keep paying,” he asks?

Mr K.G. Karmakar, Managing Director, Nabard, the nodal agency for implementing the waiver scheme, said some farmers felt they had been let down. However, it should be understood that the scheme was for the farmers in distress, he said. “Medicine is given to only sick people. Not to somebody who is healthy,” he said.

waiver bill

As on July 7, cooperative banks and regional rural banks have submitted a list to Nabard for loan waiver amounting to Rs 37,462.59 crore, said Mr Karmakar. The list is updated by RRBs and cooperative banks on a weekly basis.

Public sector banks account for the rest of the Rs 75,000-crore waiver package announced by the Government. Of this, Maharashtra accounts for Rs 5,742.33 crore, Andhra Pradesh Rs 5,130.13 crore and Tamil Nadu Rs 237.93 crore. The Tamil Nadu Government, which recently waived farm loans amounting to about Rs 7,000 crore, has now sought reimbursement under the Central Government-initiated waiver scheme.

Short-term loans

Nabard plans to extend short-term loans to RRBs and co-operative banks to help them extend fresh loans to farmers. Nabard recently hiked the long-term lending rate to commercial banks by 0.50 percentage point to 10.25 per cent and cooperative banks’ to 9.5 per cent, while that offered to the RRBs has been marked up by one percentage point to 10 per cent.