The total amount of crop loan disbursed in West Bengal through 17 district central cooperative banks and state cooperative bank stood at Rs 956 crore in the last financial year, which do not come under the loan waiver scheme.
"We were expecting the recovery rate to rise to 78 per cent, but it stood at 56 per cent as farmers are expecting another loan waiver in the next Budget," said Samir Ghosh, chairman of West Bengal State Cooperative Bank (WBSCB).
WBSCB has reported an increase in net NPA to 5.56 per cent in the last financial year against 5 per cent registered a year ago. The chairman claimed that the NPA figures of the bank is the lowest among all the state cooperative banks in the country. "Most of the state cooperative banks have net NPA of more than 10 per cent," he added.
In absolute terms, the bank's total net NPA stood at Rs 129 crore out of which agricultural sector accounted for around Rs 100 crore. According to Ghosh, the crop loan outgo from the cooperative banks might witness a decline in the current financial year. Last year, crop loan advances in the state through cooperative banks grew by 14.05 per cent from Rs 833 crore reported in the previous year.
"In anticipation of a similar scheme or the extension of the current scheme, farmers are declining to repay fresh loans due after March 31, 2007. But they fail to understand that they would not be eligible for fresh loans and even if they repay, they would have to pay a higher interest rate of 11 per cent applicable for defaulters instead of 7 per cent," he adds.
This experience has made cooperative banks more cautious about lending to farmers.
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"We are bound to be cautious in advancing crop loans as tendency among majority of farmers have changed. Instead of treating the waiver scheme as an exception, they are taking it as an annual ritual," Ghosh said.
"We would take a call on the crop loan advances only after the policy decision regarding the debt waiver due in June 2008," he added.
When contacted, P Mohanaiah, chief general manager of National Bank for Agriculture and Rural Development (Nabard), said, "Till February, the recovery rate was okay. But since the loan waiver scheme was announced in the Budget, farmers have stopped repaying. The recovery rate in the last quarter has declined both in case of the rural banks as well as the cooperative banks," he said.
According to the SLBC figures, the total amount of loan outstanding in direct agriculture through the rural banks in West Bengal is close to Rs 700 crore and the recovery rate has been close to 50 per cent.