Why does Maharashtra CM Devendra Fadnavis want banks to give loans to farmers without the credit score?

When a borrower approaches a bank or NBFC for a loan, the bank invariably asks for the credit score. A credit score is a three-digit score given by a credit bureau which indicates a borrower’s creditworthiness i.e., whether the person is likely to repay the loan.

This is, apparently, an urban concept where borrowers are either salaried or self-employed whereas in rural areas where farmers apply for loans – the same rule of credit score does not apply. This is what came to light in a recently concluded bankers committee meeting which concluded on Monday.

The meeting was chaired by Maharashtra Chief Minister Devendra Fadnavis, where a loan disbursement plan worth ₹44.76 lakh crore for the financial year 2025-26 was approved.

The chief minister urged banks not to ask for the credit score (popularly known as CIBIL score). He even threatened banks of strict action if banks continued asking for the credit score from farmers.

Last year, the state government had issued warning that FIRs would be lodged against those banks which continued to ask for credit score before disbursing crop loans. “Even the Reserve Bank of India (RBI) has clarified that CIBIL score is not necessary for crop loans,” he mentioned, warning the bankers, reported Hindustan Times.

These are some of the reasons for which farmers may not have a strong credit history.

No credit history: Some possible reasons

I. Farmers typically borrow money from the local moneylenders and even relatives. And none of these people report to credit bureaus for obvious reasons.

II. Government initiatives such as Jan Dhan Yojana, and digital payments are fairly new. So, several farmers are being included in the formal financial ecosystem, while credit histories take some time to take shape.

III. Several farmers may still be unaware of how credit scores work, how to build it. So, they stay out of the formal borrowing ambit.

IV. As a result of risk perception, banks tend to avoid lending to small and marginal farmers, thus restricting their opportunity to build credit history.

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