R. Jagadeeswara Rao

Extend loans to tenant farmers at a whopping rate of 24 p.c. interest

Generally there are no restrictions on the activities of SHGs and use of loan amount taken

There are more than 35,000 SHGs in Vizag and last year Rs. 280 cr. was given to them

VISAKHAPATNAM: A new and interesting development in the farm sector is the emergence of members of SHGs (self-help groups) as money lenders. Sounds surprising? But it’s a fact.

According to senior officials of banks which finance SHGs under the bank-linkage programme, this practice of money lending to farmers, mainly to tenant farmers, is widely prevalent in rural areas.

SHGs, which get loans from the banks at three per cent (paavala vaddi) interest lend at the rate of a whopping 24 per cent. SHG members take loans for the stated purpose of agriculture, dairying, setting up shops etc. But, generally there are no restrictions on the activities of SHGs and the use of loan amount taken from the banks under the bank-linkage programme.

Main clientele

Tenant farmers who are not eligible to get many concessions like crops loans, subsidy on seed and fertilizer are the main clientele for the SHGs.

An estimated 40 per cent of farmers are tenants. In case the tenant farmer fails to repay the amount in time, the women member would borrow from private money lender and repay the bank loan in time, because ‘paavala vaddi’ would be applicable only to members who repay promptly.

There are more than 35,000 SHGs in the district and last year Rs. 280 crore was pumped to these groups under the bank-linkage programme.

According to bankers, the target this year is Rs. 360 crore.

Labour shortage

Besides shortage of seed and difficulties in getting crop loans, the other problem that the farmers as community face is severe shortage of labour. Thanks to the implementation of National Rural Employment Guarantee Programme, labourers prefer to work for schemes under the NREGP. Besides other facilities, working hours are limited under the NREGP.

Daily wages

According to farmers, agricultural labourers are demanding between Rs. 150 and Rs.200 as daily wage.

Adequate number of labourers are not available even if one is prepared to pay the wage. Now that Chief Minister Y.S. Rajasekhara Reddy announced enhancement of daily wage for works under the NREGP from Rs.100 to Rs.120, and with farm operations for kharif picking up leading to more demand for labourers, the problem is likely to get accentuated.