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Want to avail crop loan? First buy a life insurance policy

The bankers are insisting that farmers buy personal life insurance cover in return for sanctioning of crop loans.

Published: 28th October 2021 08:54 AM  |   Last Updated: 28th October 2021 08:54 AM   |  A+A-

Farmers, Agriculture

Image used for representational purpose only.

Express News Service

WARANGAL: Farmers are now facing a new problem in securing crop loans. The bankers are insisting that farmers buy personal life insurance cover in return for sanctioning of crop loans. This precondition has become more a rule than the exception in many of the public sector banks in Warangal.

Take for instance the case of T Ravinder Reddy, a farmer from Pedda Pendyala village in Dharmasagar mandal in Hanamkonda district. When he approached the Union Bank in Karumapuram for crop loan, the officials immediately asked him to take personal life insurance policy. “First you take an insurance policy and then come back to us,” they told him. 

Though the farmers in Telangana are covered by Rythu Bima, under which, in the unfortunate even of the demise of the farmer, his family gets Rs 5 lakh, the bakers are refusing to accept it as eligibility criteria for sanction of crop loans. Ravinder Reddy said that for the sanction of Rs 1 lakh crop loan, bankers insisted on him taking life insurance policy for Rs 2 lakh.  

“I have approached several banks for crop loans and there is a similar response from all of them. I have Rythu Bima, but the bankers are asking me to take personal insurance policy. I finally had to take a policy for Rs 2 lakh, paying the first annual premium of Rs 8,900. They are taking advantage of our helplessness to palm off their products on to us,” he said.

Another farmer, Tanduri Srinivas of Chityal in Bhupalpally district said that the bankers were insistent even after he told them that he cannot trade off his insurance policy for a crop loan. “When the officials kept insisting, I decided not to take the loan at all and walked out of the branch,” he said.

When Express contacted Union Bank of India, Warangal Regional Deputy General Manager G Shankarlal, he said purchasing life insurance policy was not mandatory for sanctioning crop loan. “We are not insisting on the farmers to buy insurance policies,” he said. However, the situation at the branch level is quite contrary to his claims.



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