High stress in MSME, Farmer loans in Gujarat

At State level Bankers Committee meeting chaired by Chief Minister Vijay Rupani, a report was released for April-June 2019 quarter, the agricultural NPAs (Non-Performing Assets) rose by about 48% to INR 6326 crore. The agricultural NPAs stood at INR 4270, last year in the corresponding period. There is high stress in MSME and Farmers Loans in India and particularly Gujarat.

SBLC Meeting Gujarat on 16th September
Agricultural-Term Loan Increase by 53%

The agricultural term loan availed by farmers to enable themselves to pay for the long-term investment requirements for farm specific activities increased by 53%. It increased to a whopping INR 4272 crore for this quarter as against INR 2792 crore in the previous year, during the same period.

The agricultural term loans marginally increased to INR 38312 as compared to that of INR 36,468 crore last year. However, the NPA percentage-to-outstanding for the agri term loans rose by 11.5% as against 7.66 percent in the previous year.

Mudra Loans increased NPAs

Also, mudra loan NPAs increased by 34% in March quarter. The noticeable part is that out of 516.32 crore NPAs in the scheme, bad loans of about Rs 209.87 crore belong to shishu scheme.

Droughts in Gujarat

SLBC convener and Executive Director, Bank of Baroda, Vikramaditya Singh Khichi claimed that the given stress state is due to the drought-conditions which prevailed in Gujarat last year.

He further expressed hope that the situation would change for better, he said “This year with better monsoon and good crop situation we believe this stress will ease out.” 

Impact of Overall Economic Slowdown on NPAs

Out of the total outstanding of INR 1,04,882 crore for MSMEs, NPAs was at INR 7290 crore, as on June 2018. Whereas in June 2019, the gross NPA increased to INR 8974 crore with total outstanding of INR 1,26,663 crore. Thus, the NPA were 6.9% in June 2018 but NPAs increased their share by 7% in June 2019.

As for Gujarat, the total advances were INR 6,05,879 crore and NPAs stood at INR 39,695 crore. The NPAs percentage share stand at 6.55% which is marginally lower than previous year. There is high stress in MSME and farmer loan and will increase further due to slowdown.

NBARD urged to Extend Funds

RBI Deputy chief governor, urged NABARD to extend funds from Rural Infrastructure Development Fund (RIDF) to districts that have credit ratio less than 40%. There are 7 districts which qualify for the above-mentioned scheme in the state.

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