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Indian farmers are turning to illegal moneylenders charging exorbitant rates as banks are shunning them due to rising bad loans.
Higher interest rates are pulling down farm earnings, which are key to reviving the economy.
Agriculture accounts for nearly 15 percent of India’s $2.8 trillion-economy and is a source of livelihood for over half of its 1.3 billion people.
Indian banks typically charge between 4 to 10 percent for crop-related loans.
Private moneylenders now ask for 48-60 percent as more farmers seek loans. Last year, they charged 24-36 percent interest.
The Indian government has instructed banks to increase lending, but bankers are choosing to be cautious.
The banks complain that they are caught up by farm loan waiver schemes done by several states ahead of elections to win over farmers.
