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 assemble down south, along with the subcontinent’s farmers, there is an additional neighborhood gearing up.

In about two lakh branches of banks, RRBs and agricultural cooperatives in rural/ semi-city India, team now acquire programs, course of action paper and disburse revenue to crores of Compact and Marginal (SM) farmers, renewing their crop loans. Some are specified new loans. These farmers very own fewer than five acres of lands.

It is a enormous seasonal exercise which goes generally unsung, unhonoured. The borrower normally takes on an regular fewer than ₹1 lakh. In the towns, no person would give a banker a next look for that sum. But this volume is the variation in between a livelihood and not getting just one for farmers.

The loans specified for crop cultivation, commonly known as Kisan Credit rating Card (KCC) loans, sustain India’s foodstuff grains output and a bulk of them are specified in Kharif. At very last count, the KCC loans aggregated about ₹7 lakh-crore, specified to just about as numerous farmers. Out of our 14 crore farmers, 85 for every cent are SM. A pair of crores till fewer than this size. No loan reaches them because they are lessee/tenant/share-croppers.

SM farmers

The SM farmers are far more entrepreneurial than other business owners and give “margin” or very own contribution for loans – their land which they keep pricey, come superior drinking water or complete drought. This should really be fantastic “collateral”. Bankers should really know. In Kharif, paddy, soya bean, cotton, sugarcane and pulses are their favourites. Banking companies have to measure credit score like fantastic old “rations” of the Sixties. You do not have a Scale of Finance (SoF – denoting the volume of loan that can be specified for every acre) for any other type of loan. Some clever “babus” extensive ago made the decision this SoF has to be fixed by the District Level Complex Committee.

The SoF idea continues to be immutable. You can redefine God but not “SoF”. You may perhaps theoretically have about 730 “SoF” for, say, paddy because we have some 730 districts. Somebody attempted to suggest a topic like ‘One Nation, One Farmer, One Crop, One SoF’. Sensible because the output price the Sarkaar pays is ‘One Nation, One Commodity, One Price’. But all those who know better are but to settle for this logic.

Till the harvest is taken, the rains by themselves can be a spoilsport. If the crop survives, then will come the market place price which could be like a yo-yo. Besides for paddy, where procurement at MSP works. Then, the farmer goes back with the money to repay both equally principal and curiosity to renew his loan for his upcoming crop. Mainly this is money. Digital is but to be the norm. The cycle carries on. The authorities presents curiosity subsidy of two for every cent. Moreover three for every cent for all those who repay immediately.

But Covid surge two., has produced the tiny and marginal farmer far more vulnerable. Very last calendar year, he noticed to it that his section stands out, making for a constructive accretion to countrywide profits. They then are the “Covid Casabiancas”. This year, subject reviews are negative because of to the next wave. Even for the hardened son of the soil, this blow is a very little also hard. Can governor Shaktikanta Das, whose ‘radical empathy’ is self-obvious, spare a considered for the SM farmer whole lot borrowing up to ₹3 lakh? Purely as a just one-time measure, up to March 31, 2022, inform banks that if curiosity by itself is serviced, farmers require not be handled defaulters? We owe it to our Anna Daataas in this Covid-Kharif.

(The creator is top general public sector bank executive. Views are personalized)