Comments
Throwing light into the unhealthy financial practices prevailing in Kerala’s fisheries sector, a study by the Central Marine Fisheries Research Institute (CMFRI) has found that financial inclusion in the sector is dismal with the credit transactions being dominated by informal money lenders.
Despite the presence of prominent co-operative financial institutions, fishermen are forced to borrow money from private financial players to go fishing. Borrowing from informal sources are preferred as it involves easy procedures compared to institutional sources and enables flexible repayment options based on fish catch. As a result, the fisher folk are bound to repay the loan with high interest rates.
Sources of credit
Generally, fishermen take loan for their investment requirements from multiple sources including informal players such as auctioneer-middlemen, third-party shareholders, and private money lenders; and formal sources such as Matsyafed societies, co-operative banks, commercial banks, and non-banking financial entities.
The auctioneer-middlemen were found to be the most common source of credit for the fishermen, with about 69 per cent of sample vessels having availed market-tying loans from them. These loans are disbursed on condition that future catches from the vessels are marketed through the loaner for a commission that ranged between 5-10 per cent of value of the catch.
Reforming the system
Shinoj Parappurathu, senior scientist of CMFRI's socio-economics division, who led the study said that the fish auctioning system should be reformed to improve financial inclusion in the sector.
“To attract fishermen towards formal banking system and to curb exploitative lending practices, the government should encourage financial institutions to extend financial support after considering fishing vessels as collateral security. To enable this, linking formal credit with insurance is a sensible option,” he said, adding that the fishery co-operative societies should be strengthened to improve the financial condition in the sector.
A fisherman from Alappuzha, Antony Xavier, was part of the research team. C Ramachandran and KK Baiju were other contributors to the study.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.