Home collateral Meghalaya’s low credit-to-deposit ratio – The Shillong Times

Meghalaya’s low credit-to-deposit ratio – The Shillong Times


In a meeting organized by the National Bank for Agriculture and Rural Development (NABARD), Meghalaya Regional Office in March 2021, Deputy Chief Minister Prestone Tynsong had expressed his disappointment with the low credit-to-deposit ratio of Meghalaya which stood at 42.57%. This means that about 60% of deposits collected in Meghalaya are lent to borrowers from other states. An analysis of where the 43% of loans are parked would also indicate that they go to large corporations and very few actually go to the agricultural sector or small and medium enterprises. It must also be said that some banks, more than others, have been very circumspect with regard to loans in Meghalaya. The crux of the matter is that those who really need financial help to develop their agriculture/horticulture also have no collateral to offer. If they had collateral, they might not need credit.
Interestingly, this crucial subject is never mentioned in the Assembly even though almost 75% of the population of Meghalaya are rural farmers. One of the reasons why farmers find it difficult to access credit is their lack of collateral. Most farm on leasehold land and therefore have no land to mortgage. But even when lenders have mortgaged land, it becomes difficult for banks to recover costs because, according to Meghalaya’s land transfer law, land can only be auctioned by banks to others. tribes. Some banks are said to hold land confiscated from defaulters and these have become non-performing assets (NPA). Last year, NABARD estimated a credit potential of Rs 2,593.99 crore for Meghalaya under the priority sector loans for the year 2021-22. Credit estimate for agriculture, MSMEs and other priority sectors including housing loan, education loan, etc. has been set at Rs 1,333.86 crore (51%) Rs 930.97 crore (36%) and Rs 329.16 crore (13%) respectively. But these are projected numbers that hardly translate into reality.
One area where Meghalaya is rather weak is the cooperative sector. There are not many successfully run cooperatives. Even those that have prospered for a while have gone out of business. However, in recent times, self-help groups, farmers and rural artisans have benefited greatly from state aid and can scale up their activities with adequate bank financing. In fact, the banks are there to allow these small and medium-sized enterprises to develop their economic activities and thus create jobs. Overall, the State Bankers Committee report indicates that credit flows to the agricultural sector are still very low despite the availability of a significant number of government-recognized farmers under PM-Kisan . Banks need to step up their activities and have a greater reach in rural Meghalaya.