A banker’s thought for our ‘Covid Casabiancas’

In his beautiful travelogue “Chasing the Monsoon”, Alexander Frater weaves a intriguing tale of the journey of our rains. As the clouds get down south, alongside with the subcontinent’s farmers, there is a further group gearing up.

In about two lakh branches of banks, RRBs and agricultural cooperatives in rural/ semi-city India, employees now acquire purposes, course of action paper and disburse cash to crores of Tiny and Marginal (SM) farmers, renewing their crop loans. Some are supplied new loans. These farmers individual fewer than five acres of lands.

It is a substantial seasonal exercising which goes primarily unsung, unhonoured. The borrower usually takes on an ordinary fewer than ₹1 lakh. In the cities, nobody would give a banker a next seem for that sum. But this amount is the change amongst a livelihood and not owning one for farmers.

The loans supplied for crop cultivation, popularly recognized as Kisan Credit rating Card (KCC) loans, sustain India’s foods grains output and a bulk of them are supplied in Kharif. At previous count, the KCC loans aggregated about ₹7 lakh-crore, supplied to virtually as numerous farmers. Out of our 14 crore farmers, 85 for every cent are SM. A few of crores until fewer than this dimension. No personal loan reaches them because they are lessee/tenant/share-croppers.

SM farmers

The SM farmers are extra entrepreneurial than other business owners and give “margin” or individual contribution for loans – their land which they hold expensive, occur higher drinking water or full drought. This ought to be great “collateral”. Bankers ought to know. In Kharif, paddy, soya bean, cotton, sugarcane and pulses are their favourites. Banks have to measure credit rating like great old “rations” of the Sixties. You do not have a Scale of Finance (SoF – denoting the amount of personal loan that can be supplied for every acre) for any other type of personal loan. Some wise “babus” very long in the past made a decision this SoF has to be set by the District Stage Technical Committee.

The SoF concept continues to be immutable. You can redefine God but not “SoF”. You might theoretically have about 730 “SoF” for, say, paddy because we have some 730 districts. A person attempted to suggest a theme like ‘One Country, A person Farmer, A person Crop, A person SoF’. Sensible because the output price the Sarkaar pays is ‘One Country, A person Commodity, A person Price’. But these who know better are still to settle for this logic.

Till the harvest is taken, the rains themselves can be a spoilsport. If the crop survives, then comes the marketplace price which could be like a yo-yo. Besides for paddy, where procurement at MSP works. Then, the farmer goes back with the income to repay the two principal and desire to renew his personal loan for his future crop. Mainly this is income. Digital is still to be the norm. The cycle carries on. The government delivers desire subsidy of two for every cent. Additionally 3 for every cent for these who repay immediately.

But Covid surge two., has designed the compact and marginal farmer extra susceptible. Final 12 months, he noticed to it that his phase stands out, producing for a optimistic accretion to national earnings. They then are the “Covid Casabiancas”. This year, subject reports are undesirable because of to the next wave. Even for the hardened son of the soil, this blow is a little too difficult. Can governor Shaktikanta Das, whose ‘radical empathy’ is self-evident, spare a imagined for the SM farmer good deal borrowing up to ₹3 lakh? Purely as a one-time measure, up to March 31, 2022, convey to banks that if desire on your own is serviced, farmers require not be dealt with defaulters? We owe it to our Anna Daataas in this Covid-Kharif.

(The creator is prime community sector bank executive. Sights are individual)