Nagpur: Contrary to their expectations, private lenders in the region say there is no distress borrowing in rural areas despite the economic impact of Covid.
In the villages, people turn to private lenders not only for emergency funds, but also for small sums to meet their regular expenses. Jewelers also lend for gold. Every year, farmers pledge gold for short term loans ranging from Rs 5,000 to Rs 25,000 and release it within a year. The cycle continues.
Lenders TOI spoke to said the pandemic has also reduced the scale of operations in rural areas. This in turn appears to have reduced the need for money.
“Paying school fees was a major expense that farmers depended on gold loans. But the schools have not reopened. Late payments for cotton purchases left enough cash in the hands of farmers, and loan forgiveness also helped, ”the lenders said.
Lenders in rural areas expected a rush of borrowers as stores opened after the foreclosure. The trend has been reversed, they say.
Sanjeev Kumar Daga, who has a jewelry and money lending business in the city of Achalpur, said this is the time when borrowing begins and continues until harvest. “This year, borrowers got their adornments when stores opened after foreclosure. It appears because there are no expenses to be covered due to the cessation of activities. Previously, residents pledged gold for loans of a few thousand, ”he said.
Vatsal Bangare, president of Maharashtra Swarnakar Samaj (rural), said business has fallen to 25% from the previous level. “Previously, money lenders were approached for quick loans to cover tuition fees and medical emergencies. This year, even general medical expenses appear to be on the decline. This is the trend all over the region, ”he said.
According to a source from the Buldhana Urban Cooperative Society, which is a major player in gold lending in the cooperative sector, lending is down 20%. “Our loan portfolio stands at Rs250 crore this year, which represents a reduction of about 20%,” said a source within the bank’s management.
Girish Rathi, a jeweler at Deoli in Wardha, said his business had fallen to 10%.
Lenders are regulated by the state cooperative department. A source in Wardha’s department said monthly statements filed by lenders showed lean activity.
Activists have a different point of view. Amitabh Pawde, an activist who owns a farm in Narkhed, said this indicates that there is hardly any gold left for farmers to pledge. “What was offered earlier could not be released due to repeated difficult seasons,” he said.
Kishore Tiwari, chairman of Vasantrao Naik Shetkari Swvalamban Mission (VNSSM), a state government agency responsible for agriculture, said this may be because the lenders themselves were reluctant to grant loans due to of the unstable overall situation of the economy. “Lenders can also be strapped for funds,” he said.



Leave a Reply

Your email address will not be published.