Lok Sabha Question No. 4960 (UNSTARRED), answered on 2026-03-23
Subject: Debt burden in Uttar Pradesh
Ministry: FINANCE
Asked by: Shri Sanatan Pandey

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. 4960 ANSWERED ON MONDAY, 23 MARCH, 2026/CHAITRA 02, 1948 (SAKA)

## Debt burden in Uttar Pradesh

## † 4960. SHRI SANATAN PANDEY:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government is aware that the debt burden on farmers, small businesses and ordinary families in Uttar Pradesh is continuously increasing due to which they are getting trapped in the debt traps, if so, the details thereof;
- (b) whether it is a fact that the stringency in recovery of loans by banks and non-banking financial  institutions  and  the  growing  influence  of  informal  moneylenders  are  causing social and economic problems, if so, the details thereof;
- (c) the details of the growth in total agricultural, MSME and personal loans in Uttar Pradesh since the year 2017 till date;
- (d) whether the Government has implemented any special scheme such as interest subsidy, restructuring or credit/debt counselling to provide relief from debt traps, if so, the details thereof; and
- (e) the  future  work-plan  of  the  Government  to  increase  financial  literacy  and  ensure responsible credit distribution in the said State?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a) to (c) Government of India has taken several initiatives to facilitate access to formal and affordable institutional  credit,  thereby  helping  reduce  dependence  on  informal  sources  and easing  the  debt  burden  on  borrowers.  Such  credit  enables  borrowers  to  meet  capital expenditure, working capital, and essential personal needs, supporting livelihood enhancement and productivity. Further, credit is extended by financial institutions strictly on the basis of eligibility,  assessed  requirements,  and  informed  consent,  ensuring  responsible  lending  and financial inclusion. Recovery of loans by banks is carried out in accordance with the guidelines issued by the Reserve Bank of India (RBI) and the policies approved by the respective Boards of banks. As informed by State Level Bankers' Committee (SLBC) Uttar Pradesh, no cases of strictness in recovery of loans disbursed by banks and non-banking financial institutions and increasing influence of informal money lenders has been reported.

The data pertaining to agriculture, MSME and personal loans outstanding since 2017 in the state of Uttar Pradesh is furnished in the Annexure.

(d) and (e)  The Government and RBI have taken several measures to reduce the debt burden of farmers majorly through promoting access to formal and affordable sources of finance which inter-alia include:

- Kisan Credit Card (KCC) provides farmers with timely and affordable credit for purchasing agricultural inputs such as seeds, fertilizers, and pesticides, as well as for meeting cash requirements related to crop production and allied activities. In 2019, KCC scheme was extended to cover working capital requirement of animal husbandry, dairying and fisheries.
- The Government of India's Modified Interest Subvention Scheme (MISS) offers short-term agricultural loans to farmers at a concessional interest rate of 7% through Kisan Credit Cards  (KCC),  with  banks  receiving  a  1.5%  interest  subvention.  Farmers  who  repay promptly receive an additional 3% incentive, effectively reducing their interest rate to just 4%.
- The  limit  for  collateral  free  short-term  agricultural  loans,  including  loans  for  allied activities, has been raised from ₹1.60 lakh to ₹2.00 lakh per borrower by RBI w.e.f 01 January 2025. This move enhances credit accessibility, particularly for small and marginal farmers (comprising over 86% of the total farmers), who benefit from reduced borrowing costs and the removal of collateral requirements.
- In  order  to  bring  awareness  about  the  benefits  of  the  KCC  scheme  among  farmers, Union/State  Governments,  RBI,  NABARD  and  Banks  conduct  various  awareness programmes and IEC (Information, Education and Communication) campaigns.  Further, Government  of  India  launched  a  KCC  Saturation  Drive  under  Atma  Nirbhar  Bharat Abhiyan to provide KCC to all eligible farmers. Further, to expand the benefits of the Kisan Credit  Card  (KCC)  to  all  eligible  farmers  engaged  in  Animal  Husbandry,  Dairy,  and Fisheries (AHDF) nationwide district level weekly camps were also organized.
- All Scheduled Commercial Banks have been mandated by RBI not to accept Collateral Security in case of loan up to ₹10 lakh extended to units in the Micro and Small Enterprises (MSE). As per RBI circular dated 9 th February 2026, this limit stands increased to ₹ 20 lakh from 1 st April, 2026.
- To improve the flow of credit to the unserved and underserved sectors of the economy, including the MSME Enterprises, RBI has introduced 'Co-Lending Model' (CLM) under 'Priority Sector Lending' wherein banks are permitted to co-lend with all registered NBFCs (including Housing Finance Companies) based on a prior agreement.
- Financial  Literacy  and  awareness  programmes  are  also  conducted  through  Centre  for Financial Literacy (CFL), Financial Literacy Camps (FLCs) which are set-up by RBI and banks respectively. Besides this, RBI also conducts Financial Literacy Week (FLW) every year to propagate the message of financial education on various themes among members of the public across the country.
- The Reserve Bank of India (RBI) allows banks to extend relief to distressed borrowers through various mechanisms such as loan restructuring, one-time settlement, compromise settlements etc. In addition, RBI has issued Master Directions on 17 October 2018 on relief measures by banks in areas affected by natural calamities, which, inter alia , provides for restructuring of loans by banks.

Annexure referred to in part (a) to (c) of Lok Sabha Un-Starred Question no. 4960 on 'Debt burden in Uttar Pradesh' answered on 23.03.2026

## Details of Agriculture, MSME and Personal Loans Outstanding

(Amount in Rs. crore)

| As on year end date   | Uttar Pradesh-State   | Uttar Pradesh-State   | Uttar Pradesh-State   |
|-----------------------|-----------------------|-----------------------|-----------------------|
| As on year end date   | Agriculture           | MSME                  | Personal Loans        |
| 31 March 2017         | 1,33,923              | 85,117                | NA                    |
| 31 March 2018         | 1,36,916              | 97,052                | NA                    |
| 31 March 2019         | 1,47,060              | 1,13,570              | NA                    |
| 31 March 2020         | 1,59,092              | 1,26,233              | NA                    |
| 31 March 2021         | 1,76,611              | 1,38,161              | NA                    |
| 31 March 2022         | 1,90,133              | 1,57,630              | 51,678                |
| 31 March 2023         | 2,07,767              | 1,68,617              | 47,162                |
| 31 March 2024         | 2,31,537              | 2,06,670              | 60,802                |
| 31 March 2025         | 2,47,499              | 2,48,427              | 75,288                |
| 31 December2025       | 2,52,889              | 2,89,766              | 83,202                |

Source:

SLBC Uttar Pradesh

NA - Not Available