Crop loans: State to sign agreement with banks

As banks are not ready to sanction fresh crop loans to defaulting farmers even after assurance from the Maharashtra government for repayment of loan amount under

As banks are not ready to sanction fresh crop loans to defaulting farmers even after assurance from the Maharashtra government for repayment of loan amount under its loan waiver scheme, the state has now agreed to sign an agreement with the banks as a guarantee that they will get their money back by September.

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The move will bring relief to more than 11 lakh farmers who are eligible for the loan waiver scheme — Mahatma Jyotiba Phule Shetkari Karj Mukti Yojana — but could not avail its benefit as the state government is facing serious financial crisis owing to lockdown imposed after Covid-19 pandemic outbreak. The government had also expressed its inability to pay amount to the banks for the time being.

On May 22 when the state government asked banks to provide crop loans to farmers saying the government was ready to pay the pending amount along with interest, banks were not ready to listen and demanded guarantee in black and white, officials said.

“We have decided to sign an agreement with the banks to guarantee that they will receive the pending loan amount of the eligible farmers by September,” confirmed state cooperation minister Balasaheb Patil.

“The process has started and the agreement will be soon signed with the banks. With the decision, all 11.12 lakh eligible farmers will get crop loans,” he said.

The state government needs ₹8,100 crore to write off the debts of the farmers.

“The draft of the agreement is ready. Soon banks will appoint someone who will be signing it on their behalf,” said a senior official requesting anonymity. He added that the rate of interest against the delay on the loan amount is yet to be decided.

The loan waiver scheme promises to write off loans with an outstanding of up to ₹2 lakh for farmers from April 1, 2015 to September 30, 2019. The state has transferred ₹12,000 crore in the bank accounts of over 19 lakh beneficiaries so far, and the other 11.12 lakh beneficiaries are yet to get the benefit.

In a meeting held on June 8 to review preparations for kharif season, chief minister Uddhav Thackeray expressed displeasure after he came to know that the nationalised banks have disbursed only 7% crop loans to farmers against the target set for the fiscal.

Thackeray was informed that nationalised banks have disbursed ₹2,300 crore, which comes to 7%, and district central cooperative banks have sanctioned ₹6,250 crore as crop loans, 46% of the target determined for this year.

The ongoing financial crisis has led the state government to declare a 67% cut in its expenditure for developmental works in this fiscal in view of the estimated revenue losses of more than ₹40,000 crore in March and April 2020 owing to Covid-19 outbreak.

The state, expecting the cumulative losses to be more than ₹50,000 crore in the current fiscal, has also decided to not take up new development schemes and scrap or defer the schemes that can be put on hold. Among other measures, the government has also decided to stop recruitment for government jobs, meaning that recruitment underway for 35,000 posts is unlikely now.