Paddy farmers in the State may find it increasingly difficult to secure bank loans, as many of them are facing a fresh crisis due to declining CIBIL scores. Their CIBIL scores are falling through no fault of their own, undermining their creditworthiness.

Since the introduction of the PRS (paddy receipt sheet)-based bank loan system on procured paddy, farmers have been experiencing an inadvertent impact on their CIBIL scores. Many farmers were unaware that the payment they received from the government for their procured paddy was actually disbursed as a loan, with the government acting as the guarantor.

“I never had any liability with my bank. But when I applied for a loan, I was shocked to find that my CIBIL score had dropped to 713 despite having a substantial fixed deposit. My score should have been around 875-900.

“When I checked with the bank, I was surprised to learn that I had supposedly availed a ₹30 lakh loan over the past three years, with a balance of ₹18 lakh still to be repaid. In reality, this was the amount for my paddy procurement, treated as a loan, and the government’s delay in paying the bank caused my CIBIL score to fall,” said Sasidharan P.A., a retired engineer-turned-farmer from Thrissur.

Like Mr. Sasidharan, hundreds of paddy farmers across the State are facing the same problem, and many of them are unaware of it. “Most farmers will only realise the situation when they approach the bank for a loan,” said Pandiyodu Prabhakaran, general secretary of the Desiya Karshaka Samrakshana Samiti.

K. Muraleedharan, a farmer from Palakkad, said he was denied a bank loan in 2025 for the same reason. “At first, I did not buy the bank’s explanation. It was only when a friend told me that it was due to the PRS loan scheme for our procured paddy that I understood and accepted it,” he said.

Although the State government acts as the guarantor for these loans, the technical liability rests with the farmers. “From the bank’s perspective, the question is simple: are you a debtor or not? If you are considered a debtor, your CIBIL score drops. Almost all paddy farmers are classified as debtors in this account,” said Mr. Sasidharan.