Banks in Punjab reluctant to lend for livestock rearing

Cite high risks attached to the sector despite huge potential

Banks in Punjab reluctant to lend for livestock rearing

Illustration: Sandeep Joshi

Vijay C Roy

Tribune News Service

Chandigarh, February 13

Though livestock farming has a potential to support a sizeable chunk of livelihoods both in rural and urban areas, still banks in Punjab are reluctant to lend money to this sector. At a State Level Bankers Committee (SLBC) meeting held here today, the bankers cited high risk attached to the sector and their past bitter experiences with advances turning into non-performing assets (NPAs).

Perturbed over the issue, the bankers decided to constitute a committee to look into the issues haunting the sector and to compile the possible solutions.

Sources said banks do have some exposure in the dairy sector. However, other sectors such as goat farming, piggery, poultry and fishery have almost negligible exposure by banks despite the fact that the sector has a huge potential.

According to state focus paper prepared by the National Bank for Agriculture and Rural Development (Nabard), there is a credit potential of Rs 8,000 crore in the state.

“In dairy sector, the achievement of the banks during the financial year 2019-20 was only 30% up to December 31, 2019 against the annual target. A large number of sponsored applications are pending with the banks and progress so far is not satisfactory,” said Inderjit Singh, Director, Punjab Dairy Development Board. Against a target of Rs 173 crore, banks in the state have disbursed only Rs 52 crore.

In the past three years, the input cost of dairy farmers has risen significantly. However, the farmers were not paid accordingly. There was a marginal increase in procurement price of milk as compared to increased cost of feed, putting a strain on their viability.

So the growth has been marred by high input costs, diminishing returns and lack of mechanisation. Progressive dairy farmers said many farms closed operations in the past three years as they didn’t find it a viable proposition anymore. According to Punjab Dairy Development Board (PDDB), the number of such farms is stagnant at 10,000 for the past three years.

However, officials maintained that the scenario had changed now. “Now the dairy farmers are better paid and there is a lot of potential in lending to commercial dairy farming. However, banks are not coming forward to finance them,” said Inderjit.

It’s not in the case of dairy sector only, but farmers are not getting loans for poultry, piggery and goat rearing as well. The limited flow of credit in this sector is not only hampering the growth of livestock in the state but also acting as a stumbling block in increasing the farmers’ income. Also, animal farming in India is largely pursued as a complementary or supplementary activity.

Considering the potential of livestock in the state, even state Finance Minister Manpreet Singh Badal in November last had urged the bankers to help farmers, especially small and marginal ones, to finance them for goat rearing, piggery and fisheries sector in order to enhance their income.

Dr Rajesh Yaduvanshi, executive director, Punjab National Bank and convener, SLBC, Punjab, asked the state government officials to provide hand-holding to farmers and asked the bankers to constitute a committee to look into their issues and possible solutions.


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