HYDERABAD: Around 2.5 lakh farmers who availed short-term crop loans in Telangana will no longer be able to get any type of loan from any bank because they have not repaid their farm loans. Each of these 2,55,896 individuals now has his or her account listed as non-performing asset (NPAs) and, as per standing banking rules, is no longer eligible to receive any kind of loan. These farmers owe Rs 2,362.38 crore to the banks.
Most of these NPAs are on account of four reasons, it is learnt. The first is the delay by the state government in implementing the promised farm loan waiver scheme of writing off agriculture loans up to Rs 1 lakh. The second is farmers suffering from crop losses due to natural calamities, or reasons such as pest attacks, leaving such individuals helpless. The state has no crop insurance programme in place to save farmers from such disasters that could help them tide over crop loss crises that force even those wanting to pay the banks back, not to do so.
And the third and fourth reasons, according to sources in the banking sector, are the spreading culture of not paying the banks back by a large number of farmers who believe that the government would remove their names from the farm loan waiver beneficiaries list if they repay their loans. The last reason is tied to the third, that of people speculating that the Telangana Rashtra Samiti (TRS) government is up for an election sooner than later, and will cough up the dues and pay the banks.
What farmers do not understand is that once a loan becomes outstanding, or overdue, and eventually turns into an NPA, the interest rate charged jumps from 7 per cent to up to 9 per cent and to 11 per cent or more and keeps piling up. Even if a farmer agrees to clear an NPA, unless the dues are paid in full including the principal and the interest, an account will be listed as ‘settled’ in banking language which primarily means that the account holder is a defaulter and hence as per CIBIL norms, becomes ineligible for any other loan from any bank.
The delays in clearing up the farm loan waiver dues, other than paying banks for loans up to Rs 35,000 till the end of March this year, coupled with the other reasons, have rendered a total of 3,92, 414 farmers who availed short term crop loans, agricultural term, infrastructure and ancillary activities loans into NPA account holders in Telangana as on March 3, this year.
