Credit freeze leaves farmers in the cold

Well into a month into the rabi season, farmers are more worried about the availability of loans than the weather. Though sowing has picked up, they are quite anxious as they would require money for inputs sustaining the crop.

Even the RBI acknowledged this need for loans in the form of cash to let farmers take up agricultural operations. It pegged the rabi credit demand at ₹35,000 in the rural areas.

It wrote two letters in the last week, asking banks to ensure availability of this money in the rural branches of Regional Rural Banks (RRBs) and District Central Cooperative Banks (DCCBs).

Besides this, Nabard will use its cash credit limits up to ₹23,000 to fund the DCCBs, which in turn will lend to Primari Agricultural Credit Societies (PACs) and farmers.

“We advise in this regard that banks with currency chests should ensure adequate cash supply to the DCCBs, and are advised to involve the district co-ordinators (Lead District Managers) functioning under the aegis of the State Level bankers’ Committee (SLBC),” the RBI said in a letter to the Chairmen and Managing Directors of all banks.

A senior official of State Bank of India said the patten of sanction and disbursal of rabi loans have ‘wide disparities’ from region to region, depending on a host of factors such as availability of staff for normal duties, other than those of demonetisation and availability of cash.

Regional Rural Banks (RRBs) are also facing problems. “We have just received about ₹100 crore, which we will be distributed among the districts,” said V Narasi Reddy, Chairman of Andhra Pradesh Grameena Vikas Bank.

But cash-starved banks are not in a position to ensure the cash flow. “Forget about loans, they are not getting their own money from their savings accounts for the daily usage,” Yerneni Nagendranath, President of Andhra Pradesh Rythu Sangham, told BusinessLine .

Typically, a paddy farmer in the Godavari delta needs ₹25,000-30,000 an acre in the rabi season. Other rabi crops, like black gram, would demand an investment of up to ₹10,000.

“There is no money in the informal sector because of the demonetisation. The banks are too busy handling the demonetisation drive to attend to our problem,” he said.

According to S Nagarajan, General Secretary, All India Bank Officers’ Association (AIBOU), the staff did not have time for any other normal business including advances, due to which rabi loans are being impacted across the country. “Since November 9 till today, banks are made to forget what is banking due to the unplanned demonetisation. Even if loans are processed, there is no cash to give them,” he said.

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