The Hindu : Andhra Pradesh News : Private lending to cotton growers thrives

Online edition of India's National Newspaper
Thursday, May 12, 2005

Andhra Pradesh

Andhra Pradesh

Private lending to cotton growers thrives

S. Harpal Singh

ADILABAD: Like summer, the season of private lending in the agriculture sector by cotton commission agents in Adilabad is hotting up too. Despite the Government's efforts to reduce the involvement of these middlemen, private lending to farmers has begun in right earnest.

Against the institutional lending of about Rs. 250 crores in the district, the lending by the nearly 270 cotton commission agents in Adilabad market alone stands at an estimated Rs. 100 crores.

As the rainy season draws closer the gathering of client farmers at the offices of the agents grows larger. These farmers, especially those who grow cotton, assemble at the offices of the commission agents seeking loans.

Sizeable advances

"A middleman operating on a smaller scale disburses about Rs. 10 lakhs during the season while those who have struck deeper roots disburse as much as Rs. 3 crores during the season," revealed a commission agent on conditions of anonymity.

Starting at the end of April, the client farmers are given cash for clearing their agriculture fields and seeds in the latter half of May for sowing. The month of June is relatively expenditure-free and hence the farmer goes in for another round of loans in the shape of fertilizers and pesticides from July onwards. In August, more cash loan is given by the commission agent for de-weeding in the fields. Repayment starts once the crop is sold through the same agent, starting November and lasting until late February.

Banks loans tedious

A loan of Rs. 10,000 in cash attracts a cumulative interest of 48 per cent, thereby creating havoc with the financial discipline of the farmer. Then there are about 20 commission agents from Maharashtra who operate in the Adilabad market. For every Rs. 10,000 given as loan, they deduct Rs. 1,000 as travelling expenses leaving the borrower poorer by Rs. 1,000. One of the prime causes for institutional finance to lose out to private lending is the tedious loaning process by banks.

Printer friendly page
Send this article to Friends by E-Mail

Andhra Pradesh

News Update

Stories in this Section