Members of the Tamil Nadu Farmers’ Protection Association have petitioned District Collector M.S.
Sangeetha to cancel a recent circular that requires checking the CIBIL credit report before granting farm loans through cooperative societies.
What the Circular Says
The new circular, issued by the State Registrar of Cooperative Societies, mandates that all farm loans, including those under the Kisan Credit Card (KCC) scheme, must only be given after reviewing the applicant’s CIBIL credit report.
Farmers Say It Hurts Small and Marginal Farmers
C. Nethaji, representing the farmers’ group, said the move would seriously affect small and marginal farmers who already struggle to get loans from formal banking channels.
He explained that although the Tamil Nadu government estimates paddy farming costs at ₹76,000 per acre, cooperative banks only offer ₹36,000 as crop loans.
This shortfall forces many farmers to borrow from private lenders and middlemen, often at high interest rates.
CIBIL Check Could Harm Future Loan Access
Nethaji also warned that linking cooperative society loans to the CIBIL database could disqualify farmers from getting future loans from nationalised banks, based on their credit score.
No Rule in RBI Guidelines for CIBIL Check
Farmers pointed out that the Reserve Bank of India’s 2017 guidelines on Kisan Credit Cards do not mandate the use of CIBIL scores to determine loan eligibility.
They cited the example of the Maharashtra Chief Minister, who also opposed rejecting farm loans based on credit scores and urged Tamil Nadu CM M.K. Stalin to withdraw the circular in the farmers’ interest.
MP Su. Venkatesan Opposes the Move
Madurai MP Su. Venkatesan also opposed the circular, questioning why loans from cooperative societies, meant to support small farmers, should rely on credit scores issued by CIBIL, a private company.
“These rules are unfair to small and marginal farmers whose survival depends on these small loans,” he said.
