An aggressive increase in agriculture lending targets over the years has led to overleveraging. The Q4 FY20 results of state-run lenders indicate that this has caused an increase in defaults in agricultural loans, BusinessLine reported.
A decline in credit culture due to farm loan waivers and diversion of funds is a cause for concern, the report said.
Central Bank of India's agricultural non-performing assets (NPA) ratio rose to 14.7 percent in FY20 compared with 9.7 percent in the previous fiscal.
Bank of Maharashtra's agricultural NPA was nearly 26 percent of its agricultural loans in FY20, up from 19.3 percent in FY19, the report said.
State Bank of India (SBI) also saw its agricultural NPA ratio rise to 15.8 percent in FY20 from 11.2 percent in FY18.
Between FY17 and FY20, the agriculture lending target was raised by around 14 percent a year to Rs 13.5 lakh crore.
During Budget 2020, the Centre had set an agriculture lending target of Rs 15 lakh crore for the fiscal.
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