Maharashtra CM Urges Banks to Ease Credit Score Requirements for Farm Loans
Maharashtra Chief Minister Devendra Fadnavis has called on banks to stop demanding credit scores for farm loans, emphasizing the importance of supporting farmers to prevent economic repercussions and suicides.
Farm LoansCredit ScoresMaharashtraDevendra FadnavisAgricultureReal Estate MaharashtraMay 20, 2025
Fadnavis highlighted the economic importance of agriculture and the need to treat it as a business rather than a mere supportive sector. He urged banks to increase credit to farmers, especially given the favorable monsoon forecast. “The state does not face a drought situation this year,” Fadnavis was quoted as saying by The Hindu. “The crop production will be good. All the nationalised banks should pay attention towards increasing credit to the farmers. Agriculture is an important part of the State’s economy. It cannot be ignored.”
The chief minister’s warning comes after several farmers were denied loans despite being eligible. Fadnavis had previously warned nationalised banks that FIRs (First Information Reports) would be registered against them if they continued to insist on credit scores for farm loans. This move is part of a broader effort to ensure that farmers have access to the financial support they need to sustain their livelihoods.
To be eligible for farm loans, farmers are required to own or lease agricultural land for a minimum period set by the bank. While land is typically used as collateral, this requirement is usually waived for loans up to Rs 2 lakh. In cases where farmers do not own land, banks prefer group lending. If a farmer defaults, banks may restructure loans, offer one-time settlements, or pursue recovery via debt recovery tribunals or lok adalats.
Loans become non-performing assets if they remain unpaid for over 90 days. For short-term crop loans, defaulting for two crop seasons makes it a non-performing asset, while for long-term crops, one season of default is enough to qualify it as an NPA. Fadnavis’s call for banks to ease credit score requirements aims to ensure that farmers are not unfairly denied the financial support they need to sustain their agricultural activities and contribute to the state’s economy.
Frequently Asked Questions
Why is Devendra Fadnavis urging banks to stop demanding credit scores for farm loans?
Devendra Fadnavis is urging banks to stop demanding credit scores for farm loans to prevent economic repercussions and farmer suicides, and to ensure that farmers have access to the financial support they need.
What are the eligibility criteria for farmers to receive loans?
To be eligible for farm loans, farmers must own or lease agricultural land for a minimum period set by the bank. For loans up to Rs 2 lakh, the land requirement is typically waived.
What happens if a farmer defaults on a loan?
If a farmer defaults on a loan, banks may restructure the loan, offer one-time settlements, or pursue recovery via debt recovery tribunals or lok adalats. Loans become non-performing assets if they remain unpaid for over 90 days.
What is the importance of treating agriculture as a business?
Treating agriculture as a business is important because it emphasizes the economic significance of the sector and the need for financial support to ensure its sustainability and growth.
How does the favorable monsoon forecast impact the agricultural sector in Maharashtra?
A favorable monsoon forecast indicates good crop production, which is crucial for the agricultural sector in Maharashtra. It encourages banks to increase credit to farmers to support their activities and boost the state's economy.
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