Farm loans waiver: decision raises many questions

S. Vydhianathan

Without concrete guidelines scheme would be difficult to implement say cooperative bank officials "Without guidelines, it is difficult to implement"

Will loans of those who borrowed by fraudulent means be written off?Questions compensation for honest borrowersPACBs may have to suspend operations if Government does not reimburse loan amount soon

CHENNAI: The State Government's decision to write off farm loans due to cooperative banks by agriculturists has raised many ticklish questions.

Cooperative bank officials here said that unless the Government comes out with concrete guidelines, it would be difficult to implement the loan waiver scheme. It was not clear whether the scheme was applicable to all, including those who had taken loans by fraudulent means and against whom cases had been registered or only to genuine borrowers. Again they wanted to know whether the government would compensate honest borrowers who had already paid their loans with interest.

The officials said that total loan outstanding by farmers as crop loans was worked out to Rs. 6,866 crores. Of this Rs. 4,528 crores was short-term loans, Rs. 765 crores medium-term loans and Rs 1,573 crores long-term loans.

The officials said while the loan of farmers who could not repay due to successive droughts in the State could be written off, the scheme should not be extended to those who had "cheated the banks" by making bogus claims or taken loans through fictitious names.

For example in Dharmapuri district the bank had issued loans on ghost coverages. The local officials did not make crop verification nor cross verification of land holdings at the time of issue of loans. Loans had been issued for crops like banana and turmeric inlands where it was not possible to raise such crops in these area. Cases had been registered against farmers concerned for misleading the bank and disciplinary proceedings had been initiated against officials for issuing loans without making proper enquiry.

In another case in a primary agricultural cooperative bank in Perambalur district loan was issued for tapioca. On verification it was found that the farmer, who had obtained the loan had raised onion and millet.

There were several such instances throughout the State. The officials wanted to know whether the loan waiver scheme was applicable to these loanees also and if so then disciplinary proceedings against officials should also be withdrawn.

Similarly the officials also wanted to know how the government was going to compensate honest borrowers who had been prompt in repaying the loan. They said the honest borrowers should be rewarded for repaying the loan in time. If the Government decided to reimburse the amount, then it had to allot Rs. 500 crore more under the scheme.

Meanwhile, the repayment of loans by farmers had come to a standstill affecting the financial position of the many PACBs in the State. Seventy per cent of the advances made by these banks were from their own funds. If the government did not reimburse the loan amount to the PACBs at the earliest, many banks had no other alternative but to suspend their operations. With the kuruvai season beginning from the second week of June, farmers, especially small and marginal farmers required bank loans for their farm operations. At least for advancing loans to farmers, the government should compensate the PACBs at the earliest, the officials added.

Urging the Government for early reimbursement, All-India Cooperative Bank Employees Association's P. Balakrishnan said any partial relief would not help non-viable banks to secure necessary relief. This, in turn, would make them ineligible to further advance loans to farmers, he added.

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