Cooperative banks in Maharashtra have seen a sudden rise in non-performing assets (NPA) related to the agriculture sector. This rise in such loans defaulted by borrowers is a result of a combination of factors, including loan-waiver promises made before the Assembly polls and public sector banks failing to lend to farmers.
This rise in NPA in the cooperative sector comes at a time when the central government has taken major reforms and is refinancing the sector.
As of March 31, 2025, agri NPA in the cooperative sector stood at 24.11 per cent – a steep rise from the 17,85 per cent for the quarter ending December 31, 2024. The total NPA amount of cooperative banks stood at Rs 8,214 crore as of March-end, compared to Rs 7,739 crore in December-end. Across Maharashtra, agricultural NPA stood at Rs 31,253 crores – a rise from Rs 31.059 crore in December-end. The sector has seen a rise in NPA percentage from 11.80 per cent by December-end to 11.97 per cent by March-end.
If cooperative banks see a rise in farmers defaulting, public sector banks have a completely different picture. The agricultural NPA of these banks went down from Rs 18,940 crore at the end of December to Rs 18,764 crore by the end of March. Agricultural NPA in these banks by March-end was at 16.73 per cent, down from 17.08 per cent.
All figures are from the agenda of a meeting of the State Level Bankers Committee in India (SLBC) dated May 19, 2025.
The lending structure of cooperative banks is different from that of public-sector banks. While public-sector banks treat each farmer as a single unit for lending, cooperative banks mostly lend through village-level Primary Agricultural Cooperative Societies (PACS). The PACS sends out the total requirement of loans to the district-level banks and disburse loans to farmers at the individual level.
While there can be a host of reasons for the rise in cooperative banks’ NPA, Anil Ghanwant, leader of Shetkari Sanghatana, said the pre-poll promise of a complete loan waiver, which continued to resonate even after the elections, is one of them. “What we need to understand is that the cooperative banking structure has a strong political bias to it. Most political leaders are on the boards of cooperative banks. So when it comes to repayment, there is an indirect go-slow order on the bank officials,” he said.
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But Vijay Jawandhiya, another farm leader, had a very different take. According to him, the NPA in the cooperative banks rose mostly because the sector lends more proactively than public-sector banks.
“We have to understand that the public-sector banks are wary of lending to farmers. Thus, the increase in NPA is a reflection of lower lending by them,” he said.
