Chennai, June 30 Several farmers of the delta districts of Tamil Nadu -- the rice bowl of the state -- are forced to turn to private money lenders and micro finance firms who charge anywhere between 36 per cent to 60 per cent after cooperative societies delay disbursing crop loans. Distressed and desperate, many end up losing properties they had pledged as collateral.
Farmers from various districts have voiced concerns that cooperative societies are increasingly demanding numerous documents, most notably a “no-dues” certificate from banks where they maintain their accounts, before sanctioning loans. This bureaucratic process often takes weeks, by which time farmers may have already prepared their land for sowing.
Manikantan M.R., a farmer from Thanjavur, recounted his ordeal. “The local cooperative society delayed my crop loan, insisting I obtain a no-dues certificate from my bank. It would have taken too long, and with the sowing season approaching, I had no choice but to go to a private moneylender charging 60 per cent interest,” he said.
He was required to pay the interest upfront, with the lender deducting the entire amount before handing him the remainder. “I used that money to start cultivation,” he added, noting that his previous loans from cooperatives had been interest-free.
The dire situation has pushed many farmers into a vicious cycle of debt. With such exorbitant interest rates and immediate payment demands, their financial burden increases dramatically.
The risk of losing pledged assets looms large, and the cost of cultivation inflates sharply.
Reacting to the crisis, P. Viswanathan, president of the Tamil Nadu Tank and River Irrigation Farmers Association, has appealed to legislators to seek a remedy during the upcoming monsoon session of Parliament.
“The state government must recommend to the Union government steps to streamline the disbursement of crop loans,” he urged.
He also demanded that the government issue a formal order -- known as a Government Order (GO) -- to resolve issues related to CIBIL (Credit Information Bureau India Limited) score requirements, which are hampering timely loan approval.
He emphasised that cooperative societies should simplify the documentation process and expedite loan processing to prevent farmers from turning to high-cost private lenders. “If the banking process itself is causing delays, we must reconsider its legal validity when lives and livelihoods are at stake,” Viswanathan remarked.
Farmers’ associations and activists have joined the call for reforms, warning that unless cooperative societies address procedural bottlenecks, the growing reliance on exploitative private credit could severely undercut agricultural productivity and threaten rural financial stability.
The state agriculture department has acknowledged the concerns and announced it will review the current loan process. However, farmers await swift action as the next planting season looms, and with it, the risk of another cycle of high-interest debt.
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