TN Farmers Trapped In Debt As Loan Delays Push Them To High-Interest Lenders

Farmers in Tamil Nadu’s delta districts are forced to borrow from private lenders due to delays in cooperative loan disbursements. These lenders charge high interest rates, ranging from 36% to 60%, putting farmers under financial pressure.

Many farmers lose their pledged properties because they cannot repay these expensive loans on time.

Farmers from several districts say cooperatives now demand many documents before approving loans. They especially ask for a ‘no-dues’ certificate from banks where farmers hold accounts.

This slow process takes weeks, often delaying loans until after land preparation for sowing is done.

Manikantan MR, a farmer from Thanjavur, shared his difficult experience.

He said, “The local cooperative society delayed my crop loan, insisting I obtain a no-dues certificate from my bank. It would have taken too long, and with the sowing season approaching, I had no choice but to go to a private moneylender charging 60 per cent interest.”

The lender took the full interest amount first and gave him only the remaining money.

“I used that money to start cultivation,” he said, recalling that earlier cooperative loans came without interest.

P Viswanathan urged to find a solution soon

This critical situation has tied many farmers in a cruel cycle of debt. High interest rates and upfront payment demands sharply increase the financial burden on farmers.

Farmers face the serious risk of losing pledged assets as cultivation costs rise sharply.

P Viswanathan, president of the Tamil Nadu Tank and River Irrigation Farmers Association, urged lawmakers to find a solution soon. He appealed to legislators to raise the issue during the upcoming monsoon session of Parliament and push for immediate action.

Viswanathan asked, “The state government must recommend to the Union government steps to streamline the disbursement of crop loans.”

He urged the government to issue a formal GO to address CIBIL score issues, delaying timely crop loan approvals.

Viswanathan said many farmers face loan rejections due to CIBIL-related problems that need urgent government intervention.

The President of TN and RIFA stressed that cooperatives must simplify paperwork and speed up loans to stop farmers from relying on costly private lenders.

He urged officials to act quickly so farmers aren’t pushed toward lenders charging extremely high interest rates.

Viswanathan remarked, “If the banking process itself is causing delays, we must reconsider its legal validity when lives and livelihoods are at stake.”

Farmers’ groups and activists have demanded reforms, warning delays in cooperatives will push farmers deeper into exploitative private lending.

They said rising private credit use could hurt farm productivity and weaken rural financial stability if issues aren’t resolved soon.

The state agriculture department has acknowledged the issue and promised to review the loan process soon.

But with the next planting season near, farmers still wait for quick action to avoid another round of high-interest debt.

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