Punjab Farmers Default on ₹3,006 Crore in Cooperative Bank Loans
Farmers in Punjab have defaulted on loan repayments totaling ₹3,006 crore to the Punjab State Cooperative Agricultural Development Bank. Notably, large landholders—those owning over 10 acres—account for ₹366.96 crore, representing over 12% of the total defaulted amount.
The bank has initiated recovery proceedings, including issuing arrest warrants against defaulters, a move that has faced opposition from various farmer organizations. These groups argue that such measures exacerbate the financial distress of farmers, many of whom are already struggling due to factors like crop failures and rising input costs.
In response to the growing number of defaulters, the Punjab government has implemented loan relief measures. Under a One-Time Settlement (OTS) scheme, loan relief worth ₹368 crore has been provided to 8,453 defaulters during the financial year 2024-25. This scheme aims to alleviate the financial burden on farmers and remains operational until February 28, 2025.
Despite these efforts, the issue of loan defaults persists, raising concerns about the sustainability of the agricultural credit system in the state. The situation is further complicated by expectations of loan waivers, which have led some farmers to withhold repayments in anticipation of government relief, thereby impacting the financial health of cooperative banks.
The state government continues to explore measures to support farmers while ensuring the viability of financial institutions. This includes upgrading the services of cooperative banks at a projected cost of ₹160 crore, with the project expected to be completed by June 30, 2025.
Addressing the root causes of loan defaults, such as crop failures, market volatility, and rising input costs, remains crucial. A balanced approach that combines financial relief with sustainable agricultural practices is essential to mitigate the ongoing challenges faced by Punjab’s farming community.
