When Managing Director of the State Bank of India A Rameshkumar handed over keys of a new two-wheeler to the 351st consumer recently, it made a big news in Yavatmal. The bank proudly announced its target: To clear at least a thousand cases by this March end through the 'Baliraja' scheme and "give dignity and improved mobility to farmers." This is the first year that the banks are making easy bike loans accessible to the farmers. It's a new trend.
Dilip Shende, 31, a six-acre farmer, looks in the mirror of his new Hero Honda Splendor, as a village boy bends curiously to see him. Pic: Jaideep Hardikar.
Other banks did not lag behind either. They organized loan-fairs to offer easy vehicle loans to peasants, in the name of giving them "much-needed dignity." Each one also had a target to be attained through such fairs.
Only three months ago, Diwakar Ganpat Ashtekar, 63, ended his life in paddy-rich Awalgaon village of Chandrapur district. His crop and vehicle loan liability stood at Rs 5 lakh when he consumed pesticide and died. As the risks in agriculture grew, he collapsed. The six-and-a-half-acre farmer had borrowed Rs. 2.5 lakh for a jeep from the SBI's Medki branch seven years ago for "agriculture transport." He still owed Rs.3,66,497 after having repaid Rs.1,60,776 at 18% interest rate to the bank. Also, he had Rs.1,23,771 to be repaid to the village society towards crop loan. As his debts shot up, a small natural trigger was enough for him to give in.
"We purchased the jeep for transportation of vegetables from our own farm and the village to a nearby market," says his son Rajesh, 33. "But that objective failed with the failure of crops due to droughts." The family was broke. And the jeep never ran after a few months for want of petrol. The bank has not yet seized the jeep yet. In such cases, bank officials don't dare enter the house immediately.
And yet, two-wheeler bonanza is overrunning crop loans here in crisis-torn Vidarbha, where two to three farmers are committing suicide daily one in every eight to twelve hours. Yavatmal which alone accounts for over a hundred farm suicides this season is looking at record two-wheeler sales among peasants through easy loan schemes against land.
Cross over to western Vidarbha, in Bhadumri village of Yavatmal: Dilip Shende, 31, a six-acre farmer, is done in by his overriding tensions today. For the last one year, he has been enjoying a ride on his bike a Hero Honda Splendor. Now he wonders how he would pay loan installments. This year the crop failed. Had it been good he could've paid the bank loan. "I don't have money for petrol today, where do I bring money for the installments? I wish I had not spent money on petrol," he repents.
Series by Jaideep Hardikar
Says Ankit Naitam, a Vidarbha Jan Andolan Samiti activist: "More than 150 bikes have come in to four villages in Kelapur in a month." These are the villages where over ten farmers have ended themselves this season. They did not have bike loans, but they were in debt averaging between Rs.35,000 and Rs.1 lakh, all for agriculture purposes, borrowed from institutional and private sources. And none of them had a capacity to repay the loan.
"It's a sure way of pushing farmers in to debt trap that would end up in a death trap," adds Vijay Jawandhia, 65, farmers' leader in Wardha. Jawandhia himself does not have a vehicle.
Another cotton farmer Pundalik Soyam, 47, says: "These men are heading for a sure death; they can't and won't pay the installments to the banks." Where will the money come from? "When we are unable to repay the crop loan in time and feed the families properly, buying a bike is not just foolish, it's a gamble we are bound to lose." Soyam does not own a vehicle either, and he's not entirely wrong.
The loaned money for the two-wheelers is directly going to the vehicle showrooms; the manufacturers benefit because their sales are going up. But next year when the same farmers need crop loans, would the banks give them money again, and more so when they are unable to repay the existing loan? That's the question Jawandhia and Soyam are raising.
Take Punaji Maraskolhe, 33, in Jhuli village. He bought a new Bajaj CT 100 a year ago by depositing Rs.15,000 towards down payment. He could not pay the annual installment of Rs.10,000. "The bank seized my bike last week," complains Punaji, a 21-acre farmer. "My other debts and liabilities are so much that I could not have paid for the bike."
The deals are tempting. You get a bike with a sat-bara (7/12 extract), which is not even considered a proof of land ownership. It is a basic land record, and does not substitute for a registered sale deed and a few other documents. So, if a farmer fakes on this document by bribing a clerk in a land-records office, he can get a document on his name without actually owning the land. And if a bank gives money to him on this basis, there's risk involved if that farmer decides not to repay the loan. Also, any crook may cheat a genuine farmer, who owns land, by claiming a 7/12 document on his name through bribing. This practice is still rampant.
Still, in the name of giving dignity to farmers, the easy-finance schemes are being pushed as agriculture loans, meaning a bank approves loan with strings attached. Some of these are interwoven also with crop loans.
A State Bank official in Yavatmal says, pleading anonymity: "The loan is treated as agriculture term loan to be repaid in equal installments in a stipulated duration of four years at 9% interest rate." If a farmer fails to repay money, the vehicle is seized, he admits. Eligibility criteria for term loans are that a farmer must have a good track record in crop loan payments and own either four-acre irrigated or eight-acre non-irrigated land.
Explains Kishor Tiwari, convener of the Vidarbha Jan Andolan Samiti: "Every year the bank will increase the term loan amount and deduct the installments for the bikes. The debt burden will mount on a farmer." Some farmers are aware of all this before they sign up, but they feel that banks would give them crop loans for the next season and deduct some amount from that towards the bike loan. The total loan would mount, but at least it guarantees them some money for next season, they feel.
Rajeev Niwal, 40, co-partner of Parvati Automobiles in Yavatmal, takes a different view: "This is a good scheme for the emancipation of a farmer." His argument is a bike gives mobility to a farmer, efficiency in supervision of farm work and dignity. "The two-wheelers are in huge demand in the countryside," Niwal claims. He says that this scheme will change the farmers. "It will accelerate the growth of allied businesses. For instance, the dairy business."
"Yes, it would indeed change a farmer's life, but for the worse," scoffs Tiwari. "So, when P Chidambaram announces a hike in agriculture loan in budget, it's good news for automobile industry," he says sarcastically.