NABARD, country’s premier financing institution dedicated to farm and rural sector, has expressed concern over dismal loan absorption capacity of the farmers in Jharkhand. The worry grows even considering the fact the State has nearly 70 per cent of its population dependent on agricultural practices.
The fact came into light during a series of high-level meetings which took place between NABARD’s Chairman and the officials of banks operational in the State, senior Government functionaries, including Chief Minister Raghubar Das.
“Though Jharkhand has made considerable progress in the field of agriculture and contribution of the sector in its GDP is growing, but banks lending to the farmers is not growing that much. What we see as a main reason behind this and also that the banks have indicated to, is that absorption capacity of the farmers in the State is low. All the stakeholders involved would have to ponder over this,” said NABARD Chairman Harsh Kumar Bhanwala on Tuesday.
Among other commercial banks, it is the job of the regional rural banks and cooperative banks primarily to lend farm loans to the farmers. However, in the meeting with RRBs, the fact surfaced that the banks are facing non-repayment situation which is pulling up their non-performing assets (NPAs). Reports suggest that NPA of Jharkhand Grameen Bank has gone up by 2 per cent this year.
Also, the Government has initiated merger of virtually sick seven cooperative banks with Jharkhand State Cooperative Bank and the process is expected to be complete by March 2017. However, under the RBI’s guidelines the bank would need assistance of Rs 50 crore to maintain its capital adequacy post-merger.
“The NPA is there but lower loan taking capacity is primarily due to lack of infrastructure at rural level. Investment in motorable roads, irrigation facilities, warehouses, food parks are required so that farm income goes up. NABARD spends Rs 800-900 crore through its Rural Infrastructure Development Fund (RIDF) which should be taken up to Rs 1200-1300 crore. During the meeting with the Chief Minister and Secretaries, we have expressed our readiness to play a partner with the State Government,” added the Chairman.
In another major agreement that reached during the meeting was about formation of famers producers organisation. The State Government has agreed to work in that direction in the next 2-3 years so that clusters for vegetable and other perishable farm produces can come up.