Thursday, July 7, 2011

NABARD aid to help restart farm loan disbursement-Times of India

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NABARD aid to help restart farm loan disbursement

NAGPUR: Farm loan disbursal in Vidarbha, which was virtually at standstill for the last three weeks, may get kick started again, thanks to the decision of National Bank for Agriculture and Rural Development (NABARD) to bail out the troubled Maharashtra State Cooperative Bank (MSCB). Top sources in MSCB have indicated that NABARD would release Rs 500 crore this week.

The state apex bank controlled by the Nationalist Congress Party ran into trouble just few months before the onset of the kharif season. With the government appointed administrators replacing the bank board, the clean-up got top priority. Adding to the cash-starved bank's woes, the state government headed by the Congress refused to stand guarantee to fresh loan liabilities of MSCB. The bank administrators tightened the leash on district central cooperative banks which were found diverting funds to non-agriculture purposes, though recovery from farm sector was good.

"The situation came to such a pass that since June 15, the district cooperative banks almost stopped crop loan disbursement. So, farmers had to rush from pillar to post for cash to buy seeds and fertilizers. DCCBs through village level credit societies make up for 80% of institutional credit. The chief minister requested nationalized banks to be more proactive this year but for want of clear instructions from RBI, nationalized banks are yet to come a big way on crop loans," said Kishore Tiwari of Vidarbha Jan Andolan Samiti.

"The Rs 500 crore from NABARD will be too meagre an amount as Yavatmal district alone has a demand of Rs 300 crore from farmers. Irregular monsoon has added further strain as resowing may have to be taken up in large tracts of land," said Tiwari. With costs of all inputs and preferred Bt cotton seeds available only on premium, the cash needs are going to rise in farm sector.

"More worrying is the state's stance of not regulating microfinance organizations which are fanning in the countryside offering liberal loans at usurious rates of 36%. If the crops fail because of erratic monsoon, the fallout will be disastrous for farmers," warned Tiwari

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