Maharashtra seeks RBI help in lending to Marathwada farmers as co-op banks turn illiquid

The Maharashtra government wants Reserve Bank of India (RBI) to allow financially strong district central co-operative (DCC) banks in the drought-hit Marathwada region to disburse credit to districts where the DCCs are financially weak.

Marathwada, a region reeling under severe drought, is the top priority of the state government. But five out of the eight DCC banks in this region are financially weak, which necessitates shifting the burden of achieving farm loan target to commercial banks.

Most of these DCCs in this region have been unable to recover loans extended earlier, mainly due to the state's directive to these cooperative banks not to recover loans from farmers in drought-hit areas.

Marathwada and other regions of the state have been under the grip of drought since the last three years, making it impossible for DCCs to recover the loans from farmers.

Several banks have gone illiquid and are in no position to provide fresh loans to farmers.

Osmanabad DCC bank is in the worst financial condition as it could recover only 25 per cent of the targeted recovery of loan from farmers, according to the cooperative department data.

The Aurangabad DCC managed to recover 50 per cent of loans while the Hingoli DCC recovered  61 per cent, Parbhani DCC (75 per cent), Beed DCC (79 per cent), Nanded DCC (81 per cent) and Jalna DCC (95 per cent).

Latur DCC bank is an exception, having recovered 101 per cent out of its targeted recovery.

Nagpur, Gadchiroli, Latur, Nanded, Pune, Kolhapur, Raigad, Satara, Solapur and Washim DCCs are in a sound financial position and hence the state is considering to allow them to provide loans to the farmers from the neighbouring district.

But, it will need permission from the RBI. Once it is granted, farmers, especially from the drought-hit Marathwada, will be benefited, say government officials.

The state government is also implementing various schemes, including Jal Yukta Shivar, to supply water by railway and distribution of food and fodder.

The state government, during the review meeting of Kharif season held last June, had set the target for distribution of crop loan at Rs32,244 crore.

Banks could, however, distribute only Rs25,000 crore worth of loans to farmers through the DCCs, according to officials at the state's cooperative department.