A banker’s thought for our ‘Covid Casabiancas’

In his exquisite travelogue “Chasing the Monsoon”, Alexander Frater weaves a fascinating tale of the journey of our rains. As the clouds gather down south, alongside with the subcontinent’s farmers, there is an additional neighborhood gearing up.

In about two lakh branches of banking institutions, RRBs and agricultural cooperatives in rural/ semi-city India, team now obtain apps, method paper and disburse funds to crores of Small and Marginal (SM) farmers, renewing their crop loans. Some are offered new loans. These farmers very own considerably less than 5 acres of lands.

It is a huge seasonal exercise which goes mostly unsung, unhonoured. The borrower can take on an common considerably less than ₹1 lakh. In the cities, nobody would give a banker a 2nd glimpse for that sum. But this total is the difference involving a livelihood and not obtaining one for farmers.

The loans offered for crop cultivation, popularly regarded as Kisan Credit rating Card (KCC) loans, maintain India’s foodstuff grains creation and a bulk of them are offered in Kharif. At final depend, the KCC loans aggregated about ₹7 lakh-crore, offered to nearly as numerous farmers. Out of our fourteen crore farmers, 85 for each cent are SM. A few of crores until considerably less than this size. No mortgage reaches them since they are lessee/tenant/share-croppers.

SM farmers

The SM farmers are much more entrepreneurial than other business owners and give “margin” or very own contribution for loans – their land which they keep dear, appear substantial h2o or full drought. This should be fantastic “collateral”. Bankers should know. In Kharif, paddy, soya bean, cotton, sugarcane and pulses are their favourites. Financial institutions have to measure credit like fantastic aged “rations” of the Sixties. You do not have a Scale of Finance (SoF – denoting the total of mortgage that can be offered for each acre) for any other sort of mortgage. Some smart “babus” lengthy in the past made the decision this SoF has to be preset by the District Amount Specialized Committee.

The SoF thought stays immutable. You can redefine God but not “SoF”. You may possibly theoretically have about 730 “SoF” for, say, paddy since we have some 730 districts. Somebody tried to suggest a concept like ‘One Nation, A single Farmer, A single Crop, A single SoF’. Rational since the output value the Sarkaar pays is ‘One Nation, A single Commodity, A single Price’. But individuals who know far better are but to acknowledge this logic.

Till the harvest is taken, the rains themselves can be a spoilsport. If the crop survives, then comes the current market value which could be like a yo-yo. Apart from for paddy, exactly where procurement at MSP will work. Then, the farmer goes back again with the dollars to repay the two principal and curiosity to renew his mortgage for his next crop. Mostly this is dollars. Electronic is but to be the norm. The cycle continues. The govt offers curiosity subsidy of two for each cent. Furthermore 3 for each cent for individuals who repay promptly.

But Covid surge two., has created the smaller and marginal farmer much more susceptible. Final calendar year, he saw to it that his segment stands out, making for a optimistic accretion to nationwide profits. They then are the “Covid Casabiancas”. This year, area reviews are undesirable due to the 2nd wave. Even for the hardened son of the soil, this blow is a minor too challenging. Can governor Shaktikanta Das, whose ‘radical empathy’ is self-apparent, spare a believed for the SM farmer great deal borrowing up to ₹3 lakh? Purely as a one-time measure, up to March 31, 2022, notify banking institutions that if curiosity on your own is serviced, farmers need to have not be treated defaulters? We owe it to our Anna Daataas in this Covid-Kharif.

(The author is prime community sector lender govt. Sights are personal)