In Charts: Maharashtra’s Farm Loan Crisis Worse Than It Appears

The waiver announced by the state will cover only half of the Rs 58,500-crore distressed agricultural borrowings.

Maharashtra’s farm loan malaise is deeper than it appears.

The waiver announced by the state will cover only half of the Rs 58,500-crore distressed agri borrowings in the state, the third to forego such loans after Uttar Pradesh and Telangana.

These loans are either overdue, have been restructured or classified as bad debt as on 9 March, according to data obtained by BloombergQuint from the co-operation department of Maharashtra.

A third of the total farm loans worth Rs 1.17 lakh crore in the state were overdue as on 9 March. Around 9 percent have been restructured, while 11 percent have turned into non-performing assets, according to the data.

All put together, such distressed loans comprise 50 percent of the farm sector borrowings in the state.

Chief Minister Devendra Fadnavis last week announced what he called the state’s “biggest ever” waiver of Rs 30,000 crore for small and marginal farmers.

Protests, however, continue, largely led by the Bharatiya Janata Party-led government’s alliance partner Shiv Sena and the opposition parties, over lack of details. Since 2014, around 8,000 drought-hit farmers have committed suicide in the state due to mounting debt, according to the government.

The waiver is expected to punch a hole in the state’s finances, which has a debt of Rs 3.7 lakh crore. Bankers, including Reserve Bank of India Governor Urjit Patel and SBI Chairman Arundhati Bhattacharya have criticised waivers in the recent past, saying they hurt credit discipline, and will add to India’s growing bad loans.

Here’s a snapshot of farm loans in Maharashtra in charts...

40% Of Small, Marginal Farmers Eligible For Waiver

The government said up to 40 lakh small and marginal farmers will be eligible for the waiver.

That’s 40 percent of nearly one crore small and marginal farmers in the state. Small and marginal farmers comprise more than three-fourths of the total farmers in the state, according to the state government data.

Half Of Farm Loans In Distress

Banks have advanced farm loans worth Rs 1.17 lakh crore in the state, of which nearly half are either overdue, restructured or NPAs. Nearly 60 percent of the overall agri loan accounts are in distress.

Five PSU Banks Own 50% Of Overdue Loans

Five public sector lenders own half of the loans overdue – State Bank of Patiala, Bank of Maharashtra, State Bank of Hyderabad, Bank of India and the Central Bank of India.

As many as 19.2 lakh accounts amounting to Rs 23,450 crore are overdue in public sector banks, with SBI and Bank of Maharashtra holding a little over 40 percent of these. Cooperative banks own overdue loans worth Rs 8,637 crore, followed by private sector lenders at Rs 5,484 crore.

HDFC Bank Ltd and ICICI Bank Ltd hold most overdue loans among private sector peers.

(This article was first published on BloombergQuint)