BackConfusion reigns as banks put out lists
Confusion reigns as banks put out lists
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Sivaganga/Amravati/New Delhi: Anger and confusion prevailed as banks in some parts of the country started displaying lists of farmers who would benefit from the government’s farm loan waiver package even as banks in Punjab and Haryana asked the finance ministry for “more time" and those in Vidarbha said they would make public their list of beneficiaries only on 30 June, the deadline for doing this.
In Sivaganga, finance minister P. Chidambaram’s constituency, some farmers whose names were not on the list displayed outside a branch of Indian Overseas Bank said they were not aware of the basis for their exclusion. “This scheme is a waste. I have been voting for him (Chidambaram) all the time. This time I won’t vote for him," said A. Ponniyan, 42, who owns 1.5 acres and has a total loan of Rs1.25 lakh.
READ BLOG: A Big Write-off
To make things worse, the list displayed outside this branch was in English. Bankers here said a Tamil version would be available “soon".
Click here to read Mint’s coverage of the loan waiver
It would take some more time for the lists to be displayed in Punjab and Haryana, said an official of the state level bankers committee or SLBC, to which individual bank branches have to confirm that they have published the list of beneficiaries. This person, who did not wish to be identified, said bankers had requested the finance ministry for “more time".
However, banks in Vidarbha—a cotton-growing region in Maharashtra that has witnessed a spate of farmer suicides arising from the inability to pay off debts, only some of which were taken from banks —did not make public the list of beneficiaries. A banker in the region around Amravati town, who did not want to be identified, said they had been asked to avoid displaying the lists before 30 June, the deadline for the loan waiver package. He did not give a reason for this.
Still, reports from other regions across the country indicate that commercial banks, regional rural banks and cooperative credit institutions—all part of the government’s farm loan waiver package that will see around Rs71,800 crore being written off—have started displaying lists of beneficiaries.
The government hopes to clean up the books of banks and provide a boost to agriculture through the waiver. Critics of the package have claimed that it is a populist move aimed at pleasing the electorate before key polls scheduled this year and next. Apart from waiving loans, banks have been instructed to provide new loans to the very farmers whose loans they have just written off.
The process of displaying a list of beneficiaries was rendered complex by last-minute clarifications by the finance ministry on who would be eligible for the loan, and who wouldn’t. And the need to put in place a uniform cut-off date might have left out farmers’ whose crop cycle does not match the conditionalities attached to the loan waiver scheme. For instance, in Sivaganga, the principal crop is rice, where bad loans begin to show up in a bank’s books six months after planting. Another important crop in the district, sugar cane, has a much longer repayment cycle, with the bad loans taking up to 15 months to show up in a bank’s books.
According to the government, the farm loan package is expected to benefit around 43 million farmers.
In response to a question in Parliament on 15 April, Pawan Kumar Bansal, the country’s junior finance minister, said only 27% of farm households have taken loans from formal sources such as banks, while 51.4% do not access credit either from institutional or non-institutional sources.
According to the government, India has a total of 89.3 million farmer households, 45.9 million farm households do not have access to any kind of credit and 24.1 million households use formal credit sources. The United Progressive Alliance government introduced a relief package in June 2004 for farmers indebted to moneylenders by helping them get loans from banks to pay these off. According to Bansal’s statement in Parliament, only loans worth Rs105 crore in about 36,000 cases had been disbursed by banks under the June 2004 relief package on account of inadequate documentation.
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