Policy Hits Crop Loanee

While the State Government to help out the distress farmers affected by drought and pest attack has announced conversion of Crop Loan of Short Term to Medium Term, the Policy of Government of India and the National Bank of Agriculture and Rural Development (NABARD) is coming as a stumbling block for conversion of loans, leaving farmers in a state of shock.

This issue was raised before the Union Minister of State, Agriculture, Gajendra Singh Shekhawat on 12 November here by the State Officials during the review meeting convened to review the drought and pest attack situation in Odisha.
Special Relief Commissioner (SRC) Bishnupada Sethi, Principal Secretary Agriculture, Saurabh Garg and Managing Director Odisha State Cooperative Bank , Tushar Kanta Panda and other officials were present in the meeting.
Officials say that it is expected that around Rs.1000 crores of Crop Loans advanced in the affected areas would be converted into Medium Term (Conversion) loans. However, because of the policies of Government of India and NABARD, the conversion process may get affected including the current financing for Rabi crop loans, pointed out officials. 
The District Cooperative Banks have been providing around 65 Percent of crop loans dispensed in the State. During the last Khariff Season Rs.5640 crores were advanced and during the current Rabi a target of Rs.5000 crores is given to the Cooperatives.
The Commercial Banks including the Regional Rural Banks have financed around Rs.3036 crores during Khariff. Similar target of Rs.5000 crores is given to them for current Rabi. In the drought and pest affected areas, the crop loans advanced during Khariff, 2017 to Medium Term (Conversion) loans in the following manner :
In case of crop damage between 33 PC and 50PC due to drought and pest attack, the crop loans shall be converted in to Medium Term (Conversion) loans repayable in a period of 2 (Two) years with a moratorium of 1 (One) year.
In this case, the affected farmers have to repay their converted loan dues in 1 (One) instalment during the 2nd (Second) year of conversion of loans.

Where the crop damage is 50 Percent and more due to  drought and pest attack, conversion facility of the crop loans shall be allowed for a period of 5 (Five) years with 1 (One) year moratorium.
In this case, the loan shall be recovered in 4 (Four) equated instalments beginning from the 2nd (Second) year onwards after completion of 1 (One) year moratorium.
As per the guidelines of NABARD, interest on Medium Term Conversion (MTC) loans to the farmers is 11.20 Percent. As crop loans are converted as MTC loans due to crop loss of 33 Percent and above, interest should be kept at par with crop loans i.e, @7 Percent only. The guidelines need be reviewed and revised in the interest of the farming community,urged the officials.
Similarly Government of India  provides interest incentive @3 Percent on Crop Loans for the prompt paying farmers who repay the Loans on or before the due dates. But this facility is not available in case of MTC loans as a result of which, the farmers are being forced to pay such high interest. This Policy framework is needed to be reviewed and revised, urged the Officials.
Earlier, NABARD had provided 60 Percent of the crop loans advanced by the Cooperative Banks during 2016-17 at grassroots level. But the same has been reduced to 45 Percent  this year.
Now that as per the announcement of State Government, the due dates of the crop loans advanced in the affected areas during Khariff, 2017 has been extended from 25 March 2018 to 30 September 2018.
As the loans will not be recovered in the due dates, the Cooperative Banks will face cash crunch for financing Rabi operations. Therefore, NABARD should review its Policy and increase the refinance component from existing 45 to 60 Percent, urged the officials.
Sources said that Minister Mr.Shekhawat  has said he will look into the matter and as it is a national issue, he will take up it with the Union Ministry.

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