THOOTHUKUDI: Madasamy, a farmer from Keela Arunachalapuram near Pudur, was forced to leave his village after a private microfinance institution (MFI) foreclosed on his house for failing to repay a loan.
Like Madasamy, several farmers had been forced to obtain loans at exorbitant interest rates from MFIs and usurers, which they allege was due to either denial of agriculture loans at Primary Agriculture Cooperative Societies (PACS) or the circuitous official procedures at the District Cooperative Central Bank (DCCB).
Earlier, the Centre had directed commercial banks not to disburse subsidised agriculture loans against gold mortgages from October 1, 2019, to prevent non-farmers from availing cheap loans.
Ahead of the rabi season this year, several farmers from Ottapidaram, Kovilpatti, Ettayapuram and Vilathikulam alleged that the respective PACS had denied agriculture loans against gold jewellery, instead directing them to obtain loans from the DCCB. The district has 151 agriculture societies under the bank, which only has 28 branches.
Thamilaga Vivasayigal Sangam District Secretary K P Arumugam said the “few-and-far-between branches” and the “snail-paced” sanctioning process make it difficult for the farmers to avail loans.
“DCCB officials mandate opening a savings bank account, but several poor elderly farmers do not even have PAN cards,” he said, adding that at least 30 per cent of the farmers depend on loans to practise agriculture. With many having renewed their yesteryear-gold loans due to the pandemic, the state government should consider extending subsidised agriculture loans this year, he added.
The “challenging task” of obtaining loans from the banks is in contrast to the almost instant disbursal of loans from MFIs. At a 20 per cent interest rate, several MFIs, for an Aadhaar card, disburse loans worth Rs 40,000 immediately, said Vellaisamy, a farmer from Boothalapuram. The loan amounts increase based on the assets pledged, he added.
Several agrarians said obtaining loans from private money lenders to pursue agriculture was “not advisable” since yields and remunerations vary with the vagaries of climate.