Govt., banks stand-off may hit fresh crop loans

Bracing up for the season: A farmer tilling his land using a tractor at Kothapally village near Karimnagar.

Bracing up for the season: A farmer tilling his land using a tractor at Kothapally village near Karimnagar.   | Photo Credit: T_AJAYPALSINGH

Finance Department stops payment as banks fail to furnish details

The stand-off between the government and banks over the release of dues pertaining to ‘Vaddi Leni Runalu’ (VLR - Interest free loans) may leave the farmers seeking fresh crop loans in a predicament.

The Finance Department has been asking the banks to furnish the individual account details towards the waiver of interest on loans to eligible farmers. As the banks failed to furnish the details for 2016-17 and 2017-18, the department withheld the payment for those years. The banks, on the other hand, are believed to be putting pressure on the farmers seeking fresh crop loans to pay the interest dues first.

Under the Interest Subvention Scheme, a farmer is eligible for zero interest if he has repaid the loan within one year though the banks charge an interest of 7%. Of this, 3% is borne by the Centre and the remaining 4% by the State for the farmers who repaid the loan up to ₹1 lakh within one year. The scheme was introduced in the combined State to encourage prompt loan repayments to avail fresh loans by the farmers.

After bifurcation, Telangana State too continued the scheme and released the interest amount to the banks in 2014-15 and 2015-16. However, following complaints that the waived interest had not been passed on to the eligible farmers, the Finance Department asked the banks to furnish data of the interest amount credited to each individual farmer.

“Apparently, the directive of the SLBC is not being followed by the branches at the district and mandal level. The ball is in the bankers’ court,” government sources said. The banks are also not yet ready with their annual credit plan for 2018-19 though the Kharif season has commenced.

Highly placed officials admitted that most of the banks did not furnish the data sought by the Finance Department. “There should be an understanding between the banks and the Finance Department on how many farmers qualified for the interest free loans. For this, banks should furnish the data. Interest subvention scheme is not an open-ended scheme. More so, when the government is giving Rythu Bandhu investment support scheme at ₹ 4,000 per acre from this year to decrease farmers’ loan burden,” they said. Of ₹ 6,000 crore released to the banks under the Rythu Bandhu investment support, ₹ 4,512.64 crore had been encashed by 42,94,639 farmers as on June 12.

Meanwhile for this year, the government released some amount under Interest Subvention Scheme and also directed banks to sanction fresh crop loans without waiting for the formal annual credit plan, they said.

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Printable version | Apr 1, 2020 12:27:23 PM | https://www.thehindu.com/news/cities/Hyderabad/govt-banks-stand-off-may-hit-fresh-crop-loans/article24157246.ece

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