Please tell us about your experience in the banking area related to farmers.
I have 30 years of experience in rural banking with District Central Cooperative Bank (DCCB). The DCCB works for the agricultural sector alone. So, I am very much associated with the rural agriculturists. I retired as the Chief Executive Officer of the bank in 2005-2006.
Along with the board of directors of the bank we were always on the lookout of what we can do better for agriculturists, in comparison with what banks were doing in other countries. I had with me a member of the task force committee of the Government of Maharashtra, whom the cooperative department appointed. NABARD and Reserve Bank Officers were the other members of the committee.
Maharashtra farmers are all pioneers and are in the fore front of the agricultural sector in India. Yet, they are struggling to pay out their debts. What are your thoughts on this?
The basic problem for such farmers is getting timely financial support. The thing is if they don’t get the financial support in time, they cannot use the money for the purpose they proposed to use it in the agricultural front. Timeliness is a huge factor when it comes to agricultural sector. The difference I had striven to create during my times was to observe every society early in time before loans were given out to them. That way they could be ready to make their ENC statement, sanctions, etc. There are a number of seminars and workshops that are taken care of by the societies, by the developmental officers, divisional managers, etc. We are very much aware of all this in the backdrop. So, in my district, I had brought about a systematic plan to devise a way in which loans can be sanctioned out well in time. If agriculturists cannot get loans on time, he/she cannot go about his/her work on the land, which curbs profits, and in turn curbs the chances of returning the borrowed money to the bank.
The second thing, as far as my experience goes, is that the quantum of funds is insufficient for them. By quantum of funds I mean, suppose the farmer requires x amount for agricultural purposes, i.e., for instance, Rs. 50,000/- for a particular crop, for which the bank sanctions Rs. 30,000/-. So there is a deficit of Rs. 20,000/-, which argumentatively he will have to borrow from the market at perhaps a higher rate of interest. At the time of repayment, he will not be in a position to repay the bank first. As an intelligent human being, he will be focussed on repaying the loan from the market which is on a higher interest rate, first. This, in turn, will put the bank in a difficult position, and then there is a struggle to recover funds.
What I have done in this space, at my bank, is that every year we appointed a technical committee. We did a rate analysis for every crop. In the rate analysis system, we estimated the exact cost that would be incurred for that particular crop. We issued funds as per the rate analysis’ outcome.
The third thing is the farmers’ market approach. The bank should give a market approach for a particular crop. What I mean by market approach is to analyse the crop requirement in the market. We needed to analyse the cropping pattern for that particular area. If you take a village with n number of farmers and they all produce just one crop, this can lead to a high production of that particular crop alone. This, automatically, pulls down the rate of that crop because rate is inversely proportional to availability. In this space, the change I brought about is that we insist on a normal credit statement that we inspect and report to our development officer. The cropping pattern should be developed rapidly. If there is a great production capacity for grapes, for instance, and we see a potential for pomegranates in the neighbouring area, we will support that. I feel cropping patterns should be adopted by financial institutions as well, because we have facilitated training for farmers.
As per my observation, these are the most important 3 things.
Are you based out of Satara itself?
Yes, I am a native of Khandala, and Satara is around 55 kms from there. I have been with the bank in Satara for 40 years. I retired in December of 2015.
Now that you have retired, what are you doing?
I have joined the another group from the second day post my retirement as VP Accounts, Audits and Finance. Unfortunately, that was in the construction line of business. After one year of my association, I realised that that was not an area I was interested in. So, I left that and now I have started a Pune based competitive exam centre. It is a franchisee of the Delhi-based institution called Institute of Banking Examination Services. I run a centre in Pune, where I stay currently.
Are you currently doing anything in the agricultural sector?
Yes, of course. Now I have taken up various certifications. From this year, I plan on indulging in the agricultural area. I have made an agreement with the National Agricultural Center for selecting around 22 subjects. My initiative is to conduct seminars at the village level for the farmers. We will do this in conjunction with the National Horticulture Board.
So, you are spreading the national Horticulture board scheme across farmers?
Yes! I will be the trainer training the farmers based on the subjects for the day.
Will you be interested in helping farmers prepare reports and get bank loans for their projects?
Yes! I am offering finance support to people. It is a private consultancy. I am helping farmers in writing up reports and getting financial support. From this year my competitive exam centre is being run by my daughter. I am free now and I am looking forward to helping farmers.
What are some of your highlights/achievements as the CEO of the Satara DCCB?
The improvement made at the recovery desk was a big achievement. When I had taken charge, the recovery percentage of the bank was 84%. I had made a road map for the rest 16%. This was in association with the developmental officers, regional managers, branch managers and all staff. For every job level I introduced a seminar/workshop and established how we can work towards a 100% recovery scheme. I am really proud that that year, I achieved that goal.
I had brought about one scheme regarding Mediclaim for farmers. I convinced the board to give such facilities to the farmers because farmers would take it at a personal level. Some farmers need medical aid but they cannot go to hospitals. The board got convinced, and around 90000 farmers were added to the Mediclaim scheme. This gave farmers a huge relief towards seeking good treatment without being worried about money.
How does this Mediclaim work? How did you manage people to sign up for that?
Every society in the village has an association with the bank because it is a member of the bank. Every society has a data of the farmers in the village. Societies are members of the bank, and they had brought this facility into effect. Under this scheme, farmers have to take a loan in that year and also have to repay the amount in that year. The Mediclaim insurance policy is given by the bank to the members of the society who are under this scheme.
Who pays for that insurance?
The bank would pay it out of the profit it makes.
Is this common across other DCCBs in Maharashtra?
That was my experiment.
In the year 2005-2006, I paid 2 crore 60 lakh INR as premium. The development officers of the insurance company and the bank manager did not support me much. I went to the Mumbai office, met the regional director, and paid the premium. I am proud to say that that year, about 19 crore INR came to the farmers.
What are some of the key frustrating things that comes to your mind when you think of these institutions?
The institutions should provide market support as well to the farmers. Once the institution gets the deposits from the depositors, it belongs to the farmers. Farmers, when in need, should be given not just the loan but also good market support.
Do you feel people working in the bank will have the experience or ability to provide that market assistance?
Why not? I had chalked out a plan but couldn’t execute it because the number of employees and number of people in the rural area are not well aligned with this idea. This will need to be the outcome of proper encouragement; then the plan will bloom to a very high level knowledge. Without carrying out a market study, supporting the farmers does not yield well beyond a limit.
Is it okay to share your contact details with agriculturists/bankers who may have interest in seeking your advice?
Would it be okay to route support groups to you for advice and strategies, because anyone willing to invest will look for ROI as well?
Of course, please do. There are many FPO success stories in India. Getting farmers together and bringing them under a business model which is beneficial for everyone involved – is something that can be worked on. It is worth the effort with meticulous planning and deep level of understanding – understanding the market, crops and farmers.
Mr.Dilip Kumar Gujar
D73, first floor, K K Market,
Pune – Satara Road, Shankar Maharaj Math,
Dhanakawadi, Pune 43
Contact details: 9850903080
Email – firstname.lastname@example.org