Farm loan defaults up Rs.23000 crore to Rs.83153 crore in a year

The stress in the farm sector seems to have intensified, with banks reporting a 38.2 per cent increase in default of loans contracted by farmers in the financial year ended March 2018.

Despite the farm loan waiver schemes offered by several states and the hike in minimum support price (MSP) by the Centre, the Reserve Bank of India (RBI) data says loans defaults – or non-performing assets (NPAs) – in the farm sector have gone up by over Rs 23,000 crore to Rs 83,153 crore by March 2018 from Rs 60,161 crore in March 2017, the RBI said in its reply to an RTI application filed by The Indian Express.

However, according to the central bank figures, agriculture loans of banks have showed only a small rise of 4.39 per cent to Rs 11,63,253 crore in March 2018 from Rs 11,14,313 crore in March 2017. While farm loan growth showed a marginal rise, bad loans in the segment zoomed as loan waivers by state governments acted as incentives for farmers to default.

The RBI said SBI, Canara Bank, HDFC Bank, PNB and Bank of Baroda topped the list of banks which showed the highest farm loan defaults.

According to an RBI study, around 70 per cent of agri loans are crop loans, which account for nearly 67 per cent of the outstanding loan amount. A majority of these crop loan recipients (38 million) had outstanding loans up to Rs 1 lakh and their average loan amount was Rs 44,088. The loans for investment in equipment (e.g., tractors) had a share of nearly 27 per cent and 23 per cent in the number of accounts and the loan amount respectively.

Of the total 77 million agriculture credit accounts, about 39 million accounts were held by small and marginal farmers having land holding up to 2 hectares. For small and marginal farmers, crop loans constituted over 75 per cent of their total loan amount. The size of the crop loans is normally small – around 74 per cent of crop loan accounts of small and marginal farmers were up to Rs 1 lakh, the RBI study says.