Sat Jan 17 16:03:12 UTC 2026: # Paddy Farmers in Kerala Face Credit Crisis Due to PRS Loan System

The Story:

Paddy farmers in Kerala are facing a growing crisis as their CIBIL scores decline due to the Paddy Receipt Sheet (PRS)-based bank loan system. Under this system, payments for procured paddy are treated as loans, with the government acting as the guarantor. However, delays in government payments to the banks are negatively impacting farmers’ creditworthiness, often without their knowledge, making it difficult for them to secure future loans. Many farmers only discover the issue when they apply for new loans and are surprised by their lowered CIBIL scores and existing “debt.”

Key Points:

  • Paddy farmers are experiencing declining CIBIL scores due to the PRS-based loan system.
  • Payments for procured paddy are treated as loans, with the government as guarantor.
  • Delays in government payments are causing farmers’ CIBIL scores to drop.
  • Many farmers are unaware they are classified as debtors until they apply for new loans.
  • Sasidharan P.A., a retired engineer-turned-farmer from Thrissur, discovered his CIBIL score had dropped despite having a substantial fixed deposit.
  • K. Muraleedharan, a farmer from Palakkad, was denied a bank loan in 2025 due to this issue.
  • The technical liability for the loans rests with the farmers, even though the government is the guarantor.

Key Takeaways:

  • The PRS loan system, while intended to support paddy farmers, has unintended consequences on their creditworthiness.
  • Lack of transparency and communication regarding the loan mechanism is contributing to the farmers’ distress.
  • The situation highlights a potential flaw in the implementation of government support programs for the agricultural sector.
  • This issue could lead to decreased agricultural productivity if farmers are unable to access credit for their operations.
  • Urgent government intervention is needed to address the flawed loan system and protect farmers’ credit scores.

Impact Analysis:

The declining CIBIL scores of paddy farmers in Kerala could have a significant long-term impact on the agricultural sector and the state’s economy. If farmers are unable to secure bank loans, they may struggle to invest in their farms, leading to reduced yields and decreased income. This could further exacerbate existing challenges in the agricultural sector, such as climate change and market volatility. Furthermore, the crisis could erode farmers’ trust in government support programs, leading to decreased participation and potentially fueling social unrest. The government needs to address this issue promptly to prevent further damage to the agricultural sector and maintain the livelihoods of paddy farmers in Kerala.

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