Mr. Sudarshan Ritty, an agriculture graduate brings with him 32 years of experience with 5 leading financial institutions. During his tenure in various capacities – from field officer to Farm Credit Manager – it is without doubt that he has harnessed rich knowledge in the finance and farming domain.
Since 2012, he has been offering agricultural consultancy service. Having closely observed the life patterns of farmers and their plight to survive and build a decent living.
Please share with us, details of your role when you were working at financial institutions.
I joined the Punjab National bank as a field officer in 1985 wherein I was entrusted with the assignment of loans and recovery. This role also required that I identify rural people in order to get them above the poverty line. In this quest, we had to do much as a banking institution and an economic hub.
Getting the rural mass above the poverty line was the assignment during the initial days of nationalisation of the bank. There were certain schemes that were designed in tune with this aim; mainly IRDP, etc. With this, we had to get into the rural mass, identify them, their location, and profession in order to select them for financing. With time, agriculture gained more importance in this space. Hence, we had to identify farmers and analyse if he/she was actually into farming, dairy or poultry.
In those days - early 80s and late 90s - using these schemes, we could help a lot of farmers. We could help them to such an extent that people could cross poverty lines and come up with a lot of benefits.
Later on, I got the role as a manager of this project wherein I had to manage managerial issues that cropped up at regional and zonal offices.
Was floriculture also supported?
At that time, floriculture was not as popular as it is today. But dairy and poultry were massive and much sort after for loans. It was in the late 90s and early 2000s that the floriculture industry picked up. Owing to western influence, people started getting interested in decorative presentations for various functions like weddings etc. Hence, Garbera, Gladiolus, Carnation, etc. picked up speed in the market. Prior to that all these flowers were only getting imported. There were farmers in the floriculture industry even before the 90s; but, it was only for exporting. Today, all these flowers have a large place within the Indian market as well.
How was the response of the farmers when you started these schemes?
Our Indian farmers, initially, were conventional farmers. The latest technical knowhow was alien to them. For example, use of engineering materials attached to tractor, etc. were unknown to them. As a banker and agricultural officer, I had to sensitize them about all these things. Yet owing to many conventional thoughts, there was a lot of resistance towards adopting these methodologies. 1 out of 10 people selected used to come forward and give it a shot reluctantly. This was in the early 90s.
They were too scared to experiment because of their conventional thought and also because money was involved. They feared that they would end up in debt. It took a lot of effort to teach new ways of working to the few farmers who did come forward.
The good part is if one is successful, many people tend to follow. But getting that one and getting the one to do it was the hard part. That huge part rested on the shoulders of the banker and the extension officer of the agricultural department.
This is the same thing that happened with poly house technology. Today, everyone wants poly houses in their field.
What precautions would the bank take to protect itself from people who wouldn't repay loans?
These things are risky. Up to 1995, there was no hard and fast rule that the accountability of an account going bad would weigh badly on the bank officer/manager.
After 1995, when the non-performing assets norm came into picture, within 2-3 years these accountability procedures started. It is the responsibility of the manager who sanctions the loan to either recover the loaned out amount or settle the loan unless there are any shortcomings in the processed proposal or the way the procedures are lapsed.
Most of our managers were new to all this back then. Process notes were prepared as per prescribed procedures. There were many shortcomings and the proposal lacked many things because of which many officers' jobs got into trouble - they were subjected to investigation and corrective actions were taken.
There were fraud cases as well in which case, people were asked to leave their jobs.
Now the banks have decided that unless the loan requestor gives a collateral security equal to the amount of loan that the bank sanctions, banks will not part with any loan beyond 10 lakhs. Up to 10 lakhs it is okay for people holding agricultural land. But for loans beyond 10 lakhs, banks need an urban or rural collateral which should be equal to the amount of loan sanctioned.
Earlier this precautionary measure was not in force and that is why most banks lost a good quantum of money that they dispersed as loans.
Currently, do banks process loans to farmers abiding by all these rules and regulations or are they relaxed to a certain extent?
Today, farmers who are regular, routine customers; those who avail top loans are the only ones who get loans easily without any collateral security. For a new comer, there is a doubt on integrity because we don't know his/her background, their holding in the society etc. So any guarantee by our own customers will not help. In such cases, banks insist on collateral security as a measure of security for the loans they sanction.
What about the schemes that the National Horticulture Board (NHB) has in place?
The Horticulture Board has a lot of schemes but the Central Government customary allocations that used to be given to them have been reduced drastically now. They are also finding it hard to subsidize these loans. When NHB comes up with subsidies, they have to sensitize people and promote the activity.
But, they find it hard now because without budgetary allocation, they are unable to go about subsidizing. They have a lot of limitations and there are many limits also prescribed. In the last but two years, in certain cases, only SCST have been getting subsidies. Since the last 2 years, especially for poly house loans, whatever loans the NHB has promised are yet to be paid. Same is the case with the National Horticulture Mission (NHM).
How, in your opinion, can we overcome this situation so that farmers and the agricultural industry doesn't suffer?
Owing to the accountability, current bank mergers and posting of new personnel who have little knowledge of financing or agriculture, banks find it very difficult to go about sanctioning loans.
In such cases, when they are approached for loans, any person taking up such assignments will initially say that he is new and it will take some time for him to settle. These excuses will go on and in the meantime, the person requesting for the loan would have either found another bank/financial institution/local vendor to help him out.
In many of the cases, these are the issues farmers face these days. They are not happy with the banks.
I cycled from Chennai to Surat once only to meet the traditional farmers of India. I am talking about people who are currently over 80 years old, on an average. These are the people who have been practising organic farming even before the introduction of chemicals. My great grandfather wouldn't have used any of these chemicals when he farmed. At the same time, he would have techniques to fix anything that went wrong in his farm, even for things like pest control or manure, and crop disease. They didn’t depend on external inputs.
When it comes to farmers, they need money immediately. If they wait, their crop will fail. If they cannot get plant material or any inputs they need, in time, the whole purpose of the loan is defeated.
There is a table of events that need to be followed for a crop, which is time bound. And hence, getting money on time is crucial for farmers. This is a mass case. In this way, the agricultural economy dwindles. There is no production. The basic structure of the country is with agriculture.
Can people doing farming business on lease premises avail loans?
No, leased land cannot be taken as collateral because the land belongs to a third party. Third parties will not be prepared to mortgage their land to the bank for the benefit of the lessee. So, such loans will not get sanctioned.
Tenancy means half of the produce should be given to the owner and half is for the farmer. In such cases, only to an extent of 2.5 acres or so, i.e for marginal framers, the bank supports with small amounts like Rs. 50,000 to Rs. 60,000 and that too only for staple food cultivation. Beyond that, there won't be support for large amounts unless the bank gets some kind of mortgage deal done.
The mortgage should be in the farmer's name. If the person who has leased out the land is willing to mortgage the land, of course, loans will be sanctioned.
What is the procedure to procure loans for dairy farming and what is the requirement to start a dairy farm for about 10 cows?
The procedure is simple.
The person should at least have 1-2 acres of land in his name and
At least 1-2 years of experience being a dairy farmer to attain loans.
Before sanctioning loans, the requestor's CIBIL rating will be accessed, so that the bank gets to know his credit history and if he scores above 730 points he becomes eligible for a loan.
By mortgaging his land, he may be sanctioned for a loan for up to 10 animals. The choice of selecting the animals is left to the requestor but it should be in 2nd lactation if not 1st lactation. If it is beyond 2nd lactation the milk will be less and that is not a great sign. Likewise, for each animal there is a fixed clause by NABARD.
As per NABARD's limit, the bank will sanction a loan of up to 12 lakhs for 10 animals. 1 month's feed for the animal, the animal's standard cost and amount for setting up the shed etc. will be calculated as per agricultural procedure, before the loan amount is sanctioned.
Is there any provision or scheme where loan can be sanctioned for buying agricultural land?
Banks won't sanction loans for buying land. But, for improving and developing the land or setting up the infrastructure for agricultural purposes, banks can support. For this, the purchase of the land should be an investment made by the requestor itself.
Can banks give agricultural loans to logistic business which involves transport of agricultural products like raw milk or any other agricultural product? If yes, how can we avail subsidiary benefit in the business?
Banks will go ahead in sanctioning such loans provided there is collateral security that can be given to the bank which is relevant to the extent of loan that the bank can sanction. For logistics business in terms of transportation of agricultural produce, loans can be sanctioned.
Considering that there is an upward trend with IT sector people, youngsters and women are getting into the agriculture sector and bringing in innovative strategies thus, changing the whole rhythm of it for the better, are there any special provisions that they can avail at banks?
There is no special provision. They will be treated in equality to the other farmers. The thing is the exposure becomes more important here. Any new entrant into the agricultural world, finds it very difficult. Farming is a different ball game altogether in comparison to working in front of a computer. It involves hardship of a different nature.
If they are resilient and well planned, of course they are welcome. Most people who switch over will have some trail of agriculture base in the family.
What does the bank do when there are cases wherein loans get sanctioned but the money doesn't get used for the reason it was sanctioned?
Yes, there are people who do that. It features under misutilization. In such cases, the bank manager becomes accountable if it is traced. There are cases wherein, the repayment has come through very well and loans also got closed.
Are there any subsidy/loan/schemes to start cow and goat sheds? If yes, what is the procedure?
There are two types of rules for such activity.
Government-sponsored scheme: One can avail under Mudra, SGSY, etc. and
One can directly approach and avail.
What are your thoughts on the recent trend of bank mergers?
Because of bank mergers, majority of branches which overlap; for instance Dena Bank, Vijaya Bank and Bank of Baroda got merged. There were 3 branches of those banks in some areas. Hence, the overlapping branches were closed down.
Now, staff allocation has become a problem and over staff issue is something that banks are dealing with. To top it, they are going for the 10.2 platforms of Core Banking Solution (CBS) wherein they will require very less human intervention. A single person will be able to do almost 8-10 persons' a day of bank work. So, requirement of man power will drastically get reduced.
There are around 85,000 employees with the amalgamation of Dena bank and Vijaya Bank when the requirement is hardly 35000. By closing excess branches, they are cutting down cost of rent and other expenditure like electricity, etc. By letting go of people, they will be further reducing cost much more.
CONTACT
Mr Sudarshan Ritty Gururajachar
Bangalore
Email : rittysudarshan@gmail.com
Since 2012, he has been offering agricultural consultancy service. Having closely observed the life patterns of farmers and their plight to survive and build a decent living.
Please share with us, details of your role when you were working at financial institutions.
I joined the Punjab National bank as a field officer in 1985 wherein I was entrusted with the assignment of loans and recovery. This role also required that I identify rural people in order to get them above the poverty line. In this quest, we had to do much as a banking institution and an economic hub.
Getting the rural mass above the poverty line was the assignment during the initial days of nationalisation of the bank. There were certain schemes that were designed in tune with this aim; mainly IRDP, etc. With this, we had to get into the rural mass, identify them, their location, and profession in order to select them for financing. With time, agriculture gained more importance in this space. Hence, we had to identify farmers and analyse if he/she was actually into farming, dairy or poultry.
In those days - early 80s and late 90s - using these schemes, we could help a lot of farmers. We could help them to such an extent that people could cross poverty lines and come up with a lot of benefits.
Later on, I got the role as a manager of this project wherein I had to manage managerial issues that cropped up at regional and zonal offices.
Was floriculture also supported?
At that time, floriculture was not as popular as it is today. But dairy and poultry were massive and much sort after for loans. It was in the late 90s and early 2000s that the floriculture industry picked up. Owing to western influence, people started getting interested in decorative presentations for various functions like weddings etc. Hence, Garbera, Gladiolus, Carnation, etc. picked up speed in the market. Prior to that all these flowers were only getting imported. There were farmers in the floriculture industry even before the 90s; but, it was only for exporting. Today, all these flowers have a large place within the Indian market as well.
How was the response of the farmers when you started these schemes?
Our Indian farmers, initially, were conventional farmers. The latest technical knowhow was alien to them. For example, use of engineering materials attached to tractor, etc. were unknown to them. As a banker and agricultural officer, I had to sensitize them about all these things. Yet owing to many conventional thoughts, there was a lot of resistance towards adopting these methodologies. 1 out of 10 people selected used to come forward and give it a shot reluctantly. This was in the early 90s.
They were too scared to experiment because of their conventional thought and also because money was involved. They feared that they would end up in debt. It took a lot of effort to teach new ways of working to the few farmers who did come forward.
The good part is if one is successful, many people tend to follow. But getting that one and getting the one to do it was the hard part. That huge part rested on the shoulders of the banker and the extension officer of the agricultural department.
This is the same thing that happened with poly house technology. Today, everyone wants poly houses in their field.
What precautions would the bank take to protect itself from people who wouldn't repay loans?
These things are risky. Up to 1995, there was no hard and fast rule that the accountability of an account going bad would weigh badly on the bank officer/manager.
After 1995, when the non-performing assets norm came into picture, within 2-3 years these accountability procedures started. It is the responsibility of the manager who sanctions the loan to either recover the loaned out amount or settle the loan unless there are any shortcomings in the processed proposal or the way the procedures are lapsed.
Most of our managers were new to all this back then. Process notes were prepared as per prescribed procedures. There were many shortcomings and the proposal lacked many things because of which many officers' jobs got into trouble - they were subjected to investigation and corrective actions were taken.
There were fraud cases as well in which case, people were asked to leave their jobs.
Now the banks have decided that unless the loan requestor gives a collateral security equal to the amount of loan that the bank sanctions, banks will not part with any loan beyond 10 lakhs. Up to 10 lakhs it is okay for people holding agricultural land. But for loans beyond 10 lakhs, banks need an urban or rural collateral which should be equal to the amount of loan sanctioned.
Earlier this precautionary measure was not in force and that is why most banks lost a good quantum of money that they dispersed as loans.
Currently, do banks process loans to farmers abiding by all these rules and regulations or are they relaxed to a certain extent?
Today, farmers who are regular, routine customers; those who avail top loans are the only ones who get loans easily without any collateral security. For a new comer, there is a doubt on integrity because we don't know his/her background, their holding in the society etc. So any guarantee by our own customers will not help. In such cases, banks insist on collateral security as a measure of security for the loans they sanction.
What about the schemes that the National Horticulture Board (NHB) has in place?
The Horticulture Board has a lot of schemes but the Central Government customary allocations that used to be given to them have been reduced drastically now. They are also finding it hard to subsidize these loans. When NHB comes up with subsidies, they have to sensitize people and promote the activity.
But, they find it hard now because without budgetary allocation, they are unable to go about subsidizing. They have a lot of limitations and there are many limits also prescribed. In the last but two years, in certain cases, only SCST have been getting subsidies. Since the last 2 years, especially for poly house loans, whatever loans the NHB has promised are yet to be paid. Same is the case with the National Horticulture Mission (NHM).
How, in your opinion, can we overcome this situation so that farmers and the agricultural industry doesn't suffer?
Owing to the accountability, current bank mergers and posting of new personnel who have little knowledge of financing or agriculture, banks find it very difficult to go about sanctioning loans.
In such cases, when they are approached for loans, any person taking up such assignments will initially say that he is new and it will take some time for him to settle. These excuses will go on and in the meantime, the person requesting for the loan would have either found another bank/financial institution/local vendor to help him out.
In many of the cases, these are the issues farmers face these days. They are not happy with the banks.
I cycled from Chennai to Surat once only to meet the traditional farmers of India. I am talking about people who are currently over 80 years old, on an average. These are the people who have been practising organic farming even before the introduction of chemicals. My great grandfather wouldn't have used any of these chemicals when he farmed. At the same time, he would have techniques to fix anything that went wrong in his farm, even for things like pest control or manure, and crop disease. They didn’t depend on external inputs.
When it comes to farmers, they need money immediately. If they wait, their crop will fail. If they cannot get plant material or any inputs they need, in time, the whole purpose of the loan is defeated.
There is a table of events that need to be followed for a crop, which is time bound. And hence, getting money on time is crucial for farmers. This is a mass case. In this way, the agricultural economy dwindles. There is no production. The basic structure of the country is with agriculture.
Can people doing farming business on lease premises avail loans?
No, leased land cannot be taken as collateral because the land belongs to a third party. Third parties will not be prepared to mortgage their land to the bank for the benefit of the lessee. So, such loans will not get sanctioned.
Tenancy means half of the produce should be given to the owner and half is for the farmer. In such cases, only to an extent of 2.5 acres or so, i.e for marginal framers, the bank supports with small amounts like Rs. 50,000 to Rs. 60,000 and that too only for staple food cultivation. Beyond that, there won't be support for large amounts unless the bank gets some kind of mortgage deal done.
The mortgage should be in the farmer's name. If the person who has leased out the land is willing to mortgage the land, of course, loans will be sanctioned.
What is the procedure to procure loans for dairy farming and what is the requirement to start a dairy farm for about 10 cows?
The procedure is simple.
The person should at least have 1-2 acres of land in his name and
At least 1-2 years of experience being a dairy farmer to attain loans.
Before sanctioning loans, the requestor's CIBIL rating will be accessed, so that the bank gets to know his credit history and if he scores above 730 points he becomes eligible for a loan.
By mortgaging his land, he may be sanctioned for a loan for up to 10 animals. The choice of selecting the animals is left to the requestor but it should be in 2nd lactation if not 1st lactation. If it is beyond 2nd lactation the milk will be less and that is not a great sign. Likewise, for each animal there is a fixed clause by NABARD.
As per NABARD's limit, the bank will sanction a loan of up to 12 lakhs for 10 animals. 1 month's feed for the animal, the animal's standard cost and amount for setting up the shed etc. will be calculated as per agricultural procedure, before the loan amount is sanctioned.
Is there any provision or scheme where loan can be sanctioned for buying agricultural land?
Banks won't sanction loans for buying land. But, for improving and developing the land or setting up the infrastructure for agricultural purposes, banks can support. For this, the purchase of the land should be an investment made by the requestor itself.
Can banks give agricultural loans to logistic business which involves transport of agricultural products like raw milk or any other agricultural product? If yes, how can we avail subsidiary benefit in the business?
Banks will go ahead in sanctioning such loans provided there is collateral security that can be given to the bank which is relevant to the extent of loan that the bank can sanction. For logistics business in terms of transportation of agricultural produce, loans can be sanctioned.
Considering that there is an upward trend with IT sector people, youngsters and women are getting into the agriculture sector and bringing in innovative strategies thus, changing the whole rhythm of it for the better, are there any special provisions that they can avail at banks?
There is no special provision. They will be treated in equality to the other farmers. The thing is the exposure becomes more important here. Any new entrant into the agricultural world, finds it very difficult. Farming is a different ball game altogether in comparison to working in front of a computer. It involves hardship of a different nature.
If they are resilient and well planned, of course they are welcome. Most people who switch over will have some trail of agriculture base in the family.
What does the bank do when there are cases wherein loans get sanctioned but the money doesn't get used for the reason it was sanctioned?
Yes, there are people who do that. It features under misutilization. In such cases, the bank manager becomes accountable if it is traced. There are cases wherein, the repayment has come through very well and loans also got closed.
Are there any subsidy/loan/schemes to start cow and goat sheds? If yes, what is the procedure?
There are two types of rules for such activity.
Government-sponsored scheme: One can avail under Mudra, SGSY, etc. and
One can directly approach and avail.
What are your thoughts on the recent trend of bank mergers?
Because of bank mergers, majority of branches which overlap; for instance Dena Bank, Vijaya Bank and Bank of Baroda got merged. There were 3 branches of those banks in some areas. Hence, the overlapping branches were closed down.
Now, staff allocation has become a problem and over staff issue is something that banks are dealing with. To top it, they are going for the 10.2 platforms of Core Banking Solution (CBS) wherein they will require very less human intervention. A single person will be able to do almost 8-10 persons' a day of bank work. So, requirement of man power will drastically get reduced.
There are around 85,000 employees with the amalgamation of Dena bank and Vijaya Bank when the requirement is hardly 35000. By closing excess branches, they are cutting down cost of rent and other expenditure like electricity, etc. By letting go of people, they will be further reducing cost much more.
CONTACT
Mr Sudarshan Ritty Gururajachar
Bangalore
Email : rittysudarshan@gmail.com