Monday, 10 June 2013

Vidarbha Crisis- DCC banks broke, farm loan lending far short of target-TIMES OF INDIA

Vidarbha Crisis-District central cooperative banks broke, farm loan lending far short of target

Shishir Arya, TNN | Jun 11, 2013, 02.38 AM IST

NAGPUR: In what may add to the woes of Vidarbha's crisis-ridden farmers, even as monsoon is round the corner, the most preferable source offinance for sowing expenses is not available in two districts. In Wardha and Buldhana, the district central cooperative banks (DCCBs) are in deep crisis, and not in a position to lend at all. Incidentally, Buldhana had faced one of the worst water crisis this summer, leaving farmers all the more harried.

The DCCBs were set up with the prime objective of extending loans to farmers. However, the DCCB in Nagpur too is facing constraints, though it recently got aid to the tune of Rs 75 crore from the state government. Before that, the Nagpur DCCB too could manage to lend only Rs 125 crore, half its previous year's score, after stretching its resources.

The situation is worse in Wardha and Buldhana, considering which the bankers' committee in the districts have not assigned any lending target to these DCCBs this year. The committee headed by the collector has shifted the burden to nationalized banks, which are generally known for their tardy response to farm loan applications.

Low on liquidity, farmers have to borrow each year to meet their sowing expenses. Normally, it is the DCCBs which give the majority of lending. The banks are part of the three-tier structure of the cooperative sector. The National Bank for Agriculture Development (NABARD) is at the top. It funds the Maharashtra State Cooperative Bank (MSCB), which in turn finances DCCBs. Six DCCBs in the state are in crisis and may face derecognition by the RBI. These are the banks at Nagpur, Wardha, Buldhana, Jalna, Dhule and Nandurbar.

So, an apprehensive MSCB, which itself is in a crisis, has not forwarded funds to these banks. While the government has bailed out the other banks to a great extent, the future is bleak for the banks in Buldhana and Wardha. They need around Rs 90 crore and Rs 50 crore respectively to come out of the red.

In the absence of DCCBs, the PSU banks are expected to make good the shortfall in farm loans, but the figures compiled by the state's department of cooperatives tell a different story. In Wardha, a target of lending Rs 524 crore has been fixed, with Rs 511 crore being the share of PSU banks and the rest to be done by regional rural banks. However, so far only Rs 54 crore have been lent, and sowing is expected to begin in a week or 10 days. Last year, the loans figure was almost double in the corresponding period.

In Buldhana, there is a target of Rs 700 crore, but the actual lending is little over Rs 100 crore, said a source, as against close to Rs 200 crore in the previous year's corresponding period. Buldhana district bank had a low target of Rs 103 crore last year, which it had met despite poor financial health.

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