July 14, 2024

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A banker’s thought for our ‘Covid Casabiancas’

In his beautiful travelogue “Chasing the Monsoon”, Alexander Frater weaves a fascinating tale of the journey of our rains. As the clouds gather down south, together with the subcontinent’s farmers, there is a different community gearing up.

In about two lakh branches of banking companies, RRBs and agricultural cooperatives in rural/ semi-city India, employees now acquire purposes, system paper and disburse cash to crores of Small and Marginal (SM) farmers, renewing their crop loans. Some are supplied new loans. These farmers personal less than five acres of lands.

It is a substantial seasonal training which goes mostly unsung, unhonoured. The borrower usually takes on an normal less than ₹1 lakh. In the metropolitan areas, no one would give a banker a 2nd appear for that sum. But this quantity is the distinction involving a livelihood and not having one for farmers.

The loans supplied for crop cultivation, popularly acknowledged as Kisan Credit history Card (KCC) loans, maintain India’s foods grains manufacturing and a bulk of them are supplied in Kharif. At previous rely, the KCC loans aggregated about ₹7 lakh-crore, supplied to nearly as many farmers. Out of our 14 crore farmers, eighty five for every cent are SM. A few of crores until less than this measurement. No personal loan reaches them since they are lessee/tenant/share-croppers.

SM farmers

The SM farmers are additional entrepreneurial than other entrepreneurs and give “margin” or personal contribution for loans – their land which they maintain dear, occur superior drinking water or full drought. This need to be fantastic “collateral”. Bankers need to know. In Kharif, paddy, soya bean, cotton, sugarcane and pulses are their favourites. Banks have to measure credit history like fantastic old “rations” of the Sixties. You do not have a Scale of Finance (SoF – denoting the quantity of personal loan that can be supplied for every acre) for any other type of personal loan. Some smart “babus” extended back made a decision this SoF has to be preset by the District Level Technical Committee.

The SoF thought remains immutable. You can redefine God but not “SoF”. You could theoretically have about 730 “SoF” for, say, paddy since we have some 730 districts. Someone tried to suggest a topic like ‘One Country, A person Farmer, A person Crop, A person SoF’. Logical since the output price the Sarkaar pays is ‘One Country, A person Commodity, A person Price’. But these who know better are however to acknowledge this logic.

Till the harvest is taken, the rains on their own can be a spoilsport. If the crop survives, then will come the market place price which could be like a yo-yo. Except for paddy, in which procurement at MSP will work. Then, the farmer goes back again with the dollars to repay each principal and fascination to renew his personal loan for his up coming crop. Mostly this is dollars. Digital is however to be the norm. The cycle carries on. The governing administration supplies fascination subsidy of two for every cent. Moreover 3 for every cent for these who repay instantly.

But Covid surge two., has created the tiny and marginal farmer additional vulnerable. Very last yr, he saw to it that his segment stands out, generating for a positive accretion to countrywide cash flow. They then are the “Covid Casabiancas”. This period, subject reviews are negative because of to the 2nd wave. Even for the hardened son of the soil, this blow is a very little far too difficult. Can governor Shaktikanta Das, whose ‘radical empathy’ is self-obvious, spare a considered for the SM farmer great deal borrowing up to ₹3 lakh? Purely as a one-time measure, up to March 31, 2022, notify banking companies that if fascination by yourself is serviced, farmers have to have not be dealt with defaulters? We owe it to our Anna Daataas in this Covid-Kharif.

(The creator is leading general public sector lender executive. Sights are personal)