October 1, 2023


Passion For Business

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, alongside with the subcontinent’s farmers, there is a different local community gearing up.

In about two lakh branches of financial institutions, RRBs and agricultural cooperatives in rural/ semi-urban India, personnel now get programs, procedure paper and disburse money to crores of Small and Marginal (SM) farmers, renewing their crop loans. Some are presented new loans. These farmers very own a lot less than 5 acres of lands.

It is a enormous seasonal training which goes mostly unsung, unhonoured. The borrower will take on an regular a lot less than ₹1 lakh. In the towns, no person would give a banker a next seem for that sum. But this sum is the variation among a livelihood and not having one particular for farmers.

The loans presented for crop cultivation, commonly recognised as Kisan Credit Card (KCC) loans, sustain India’s meals grains creation and a bulk of them are presented in Kharif. At last rely, the KCC loans aggregated about ₹7 lakh-crore, presented to nearly as a lot of farmers. Out of our fourteen crore farmers, 85 for each cent are SM. A pair of crores until a lot less than this dimension. No personal loan reaches them due to the fact 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 hold dear, come high water or full drought. This ought to be very good “collateral”. Bankers ought to know. In Kharif, paddy, soya bean, cotton, sugarcane and pulses are their favourites. Financial institutions have to measure credit score like very good outdated “rations” of the Sixties. You do not have a Scale of Finance (SoF – denoting the sum of personal loan that can be presented for each acre) for any other style of personal loan. Some clever “babus” lengthy in the past determined this SoF has to be set by the District Amount Technological Committee.

The SoF concept remains immutable. You can redefine God but not “SoF”. You might theoretically have about 730 “SoF” for, say, paddy due to the fact we have some 730 districts. Someone attempted to propose a topic like ‘One Nation, A single Farmer, A single Crop, A single SoF’. Sensible due to the fact the output cost the Sarkaar pays is ‘One Nation, A single Commodity, A single Price’. But people who know much better are nevertheless to settle for this logic.

Till the harvest is taken, the rains themselves can be a spoilsport. If the crop survives, then will come the industry cost which could be like a yo-yo. Except for paddy, wherever procurement at MSP operates. Then, the farmer goes back with the hard cash to repay the two principal and fascination to renew his personal loan for his upcoming crop. Primarily this is hard cash. Digital is nevertheless to be the norm. The cycle carries on. The federal government gives fascination subsidy of two for each cent. In addition 3 for each cent for people who repay promptly.

But Covid surge two., has designed the little and marginal farmer much more susceptible. Very last yr, he observed to it that his phase stands out, making for a favourable accretion to countrywide revenue. They then are the “Covid Casabiancas”. This year, subject experiences are lousy because of to the next wave. Even for the hardened son of the soil, this blow is a minor as well difficult. Can governor Shaktikanta Das, whose ‘radical empathy’ is self-obvious, spare a imagined for the SM farmer whole lot borrowing up to ₹3 lakh? Purely as a one particular-time measure, up to March 31, 2022, tell financial institutions that if fascination by itself is serviced, farmers require not be addressed defaulters? We owe it to our Anna Daataas in this Covid-Kharif.

(The author is major community sector bank executive. Sights are particular)