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 acquire down south, together with the subcontinent’s farmers, there is one more neighborhood gearing up.

In about two lakh branches of banking companies, RRBs and agricultural cooperatives in rural/ semi-urban India, team now get programs, course of action paper and disburse dollars to crores of Tiny and Marginal (SM) farmers, renewing their crop financial loans. Some are supplied new financial loans. These farmers individual much less than 5 acres of lands.

It is a massive seasonal workout which goes typically unsung, unhonoured. The borrower requires on an average much less than ₹1 lakh. In the towns, no one would give a banker a next seem for that sum. But this amount of money is the change involving a livelihood and not possessing 1 for farmers.

The financial loans supplied for crop cultivation, popularly regarded as Kisan Credit history Card (KCC) financial loans, maintain India’s foodstuff grains production and a bulk of them are supplied in Kharif. At last count, the KCC financial loans aggregated about ₹7 lakh-crore, supplied to approximately as many farmers. Out of our 14 crore farmers, 85 per cent are SM. A couple of crores till much less than this size. No personal loan reaches them simply because they are lessee/tenant/share-croppers.

SM farmers

The SM farmers are a lot more entrepreneurial than other entrepreneurs and give “margin” or individual contribution for financial loans – their land which they hold dear, arrive substantial water or whole drought. This really should be very good “collateral”. Bankers really should know. In Kharif, paddy, soya bean, cotton, sugarcane and pulses are their favourites. Financial institutions have to measure credit score like very good aged “rations” of the Sixties. You do not have a Scale of Finance (SoF – denoting the amount of money of personal loan that can be supplied per acre) for any other kind of personal loan. Some clever “babus” lengthy in the past made a decision this SoF has to be preset by the District Amount Complex Committee.

The SoF notion stays immutable. You can redefine God but not “SoF”. You might theoretically have about 730 “SoF” for, say, paddy simply because we have some 730 districts. An individual tried to propose a concept like ‘One Country, A single Farmer, A single Crop, A single SoF’. Sensible simply because the output price tag the Sarkaar pays is ‘One Country, A single Commodity, A single Price’. But these who know much better are still to accept this logic.

Until the harvest is taken, the rains them selves can be a spoilsport. If the crop survives, then will come the market place price tag which could be like a yo-yo. Other than for paddy, where procurement at MSP works. Then, the farmer goes back again with the dollars to repay both of those principal and fascination to renew his personal loan for his following crop. Primarily this is dollars. Electronic is still to be the norm. The cycle carries on. The authorities supplies fascination subsidy of 2 per cent. Furthermore three per cent for these who repay instantly.

But Covid surge 2., has produced the modest and marginal farmer a lot more susceptible. Very last yr, he noticed to it that his phase stands out, creating for a beneficial accretion to countrywide revenue. They then are the “Covid Casabiancas”. This year, discipline experiences are terrible thanks to the next wave. Even for the hardened son of the soil, this blow is a little also challenging. Can governor Shaktikanta Das, whose ‘radical empathy’ is self-evident, spare a thought for the SM farmer great deal borrowing up to ₹3 lakh? Purely as a 1-time measure, up to March 31, 2022, explain to 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 author is leading public sector financial institution government. Views are particular)