According to the figures mentioned in Maharashtra Economic Survey 2021-22, the amount of loan disbursed by licensed private lenders in Maharashtra increased by 42% in 2021.
The discovery follows the suicide of nine members of a family in Mhaisal in Sangli district due to pressure to repay principal and interest to a private lender from whom they had taken out a loan. It just goes to show how small households, farmers and landless laborers are completely dependent on private lenders, with the banking network often unable to finance them.
The survey further indicates that in 2020, more than 623,418 people received loans worth ₹1,235.38 crore licensed private lenders in Maharashtra while in 2021 over 788,706 people benefited from loans worth ₹1,755.25 crore from licensed lenders in the state. At the same time, the number of licensed lenders in the state fell from 12,993 in 2020 to 12,001 in 2021, according to the survey. The number of licensed moneylenders has decreased because the government has not renewed the licenses of many moneylenders in view of the various criminal cases brought against them in connection with the lending of money. In addition to various loan companies, the state government also allows licensed lenders to provide loans to individuals. To this end, approvals are issued to these lenders by the Cooperation Commission.
According to experts, small households and marginal farmers did not opt for a loan from the banking system although they needed it because they had no collateral, i.e. guarantees in the absence of which the banks are not authorized to grant loans. Another reason why people did not obtain loans from the formal sector was that they did not have the necessary documents to submit. A third reason for not going to the formal system is that they wanted quick disbursement. For all these reasons, small households, marginal farmers and laborers have instead chosen to borrow money from private moneylenders, despite the high interest rates.
Raghunath Dada Patil, farmer leader and commentator on private money lending, said our banking policy is not inclusive and many small and marginal farmers are left out of the banking system. “We don’t have an inclusive financial system to provide finance to the poor. Our banks are not ready to lend to the poor and the little people because they do not have stable and constant income to repay the loans. So where should they go to borrow money? asked Patil. He suggested that a more inclusive banking system was needed to address this issue.
Patil further said that licensed private lenders are just the tip of the iceberg as there are a large number of illegal private lenders who are tightening the noose around the necks of poor farmers in Maharashtra.