In a stark revelation highlighting the agrarian credit crisis, private money lenders operating in Maharashtra's Vidarbha region have disbursed loans exceeding a staggering Rs 227 crore in the current year. However, official data shows that a minuscule fraction of this sum—barely Rs 21,000—was allocated for agricultural purposes, raising serious concerns about the financial pressures driving the ongoing farm distress.
A Glaring Disconnect: Massive Lending, Zero Farm Focus
The data, maintained by the state's department of cooperatives which regulates private lenders, unveils a shocking pattern. The entire loan portfolio was primarily aimed at meeting the miscellaneous and emergency needs of rural households, not for covering farm expenses like seeds, fertilizers, or equipment. This comes against the backdrop of at least 350 farmer suicides officially recorded till September 2025, which the Maharashtra government has attributed to severe agrarian distress, with many victims being heavily indebted.
The lending activity is heavily concentrated in the Nagpur division, covering six districts of east Vidarbha. Here, around 1.6 lakh individuals received loans totaling over Rs 225 crore. Astonishingly, not a single rupee from licensed private lenders in Nagpur division was formally recorded for farming. Similarly, in the Amravati division, which encompasses five crisis-ridden districts of western Vidarbha, Rs 2 crore was lent to 1.7 lakh borrowers exclusively for non-farming needs.
Why Lenders Avoid Agriculture and Farmers Seek Informal Options
Officials explain this trend by pointing to the economics of lending. Private money lenders generally avoid agricultural loans due to lower profit margins on interest and the widespread availability of bank loans for farming. For rural residents, these lenders often become the last resort during personal emergencies. "That's the reason most loans are for non-farming purposes," an official stated.
This pushes desperate farmers towards a shadow economy. Prominent farm activist Vijay Jawandhia clarified that farmers rarely approach licensed money lenders. "Rather, there is an informal lending sector that thrives in villages. This includes moneyed individuals on whom farmers depend for emergency loans," Jawandhia said. This informal network operates outside the regulatory purview, creating a high-risk debt trap.
Regulatory Gaps and Urban Parallels
The department of cooperatives does conduct raids based on complaints about unlicensed lending, with lenders required to report to the assistant registrar in their respective taluka. However, a significant loophole exists. There is virtually no check on licensed lenders who might deploy unaccounted or 'black' money in their operations, an official admitted.
A parallel system functions in urban areas, where brokers connect surplus funds from private individuals with businessmen. While these transactions are often recorded in books and taxes are paid on interest, they are not registered with the cooperatives department. "These types of lenders only cater to businessmen. It has been an official business for years without registration," a source revealed. Department officials, however, reiterate that any lending activity by individuals in the state mandates a licence.
The situation underscores a critical failure in formal credit access for farmers, forcing them into informal debt. It also recalls that the 2015 state farm loan waiver scheme did include debts owed to private money lenders, acknowledging their role in the rural financial ecosystem. The current data, however, suggests the licensed sector is not addressing core agricultural credit needs, leaving farmers vulnerable to exploitative informal channels amidst a deepening crisis.
