Debt swap scheme, designed to free farmers from the clutches of money lenders, has failed to pick up in Punjab and Haryana, with banks failing to extend targeted amount of advances to debt-ridden farmers in these agrarian states.
The scheme has failed to achieve desired results despite the fact that the amount of loan ceiling under this scheme has been doubled from Rs 50,000 to Rs 1 lakh by the banks.
The poor performance of debt swap scheme in Punjab and Haryana could be gauged from the fact that just 17.49% and 18% of targeted debt swap have been achieved, respectively, till March 2012, as per latest data provided by state level bankers' committee (SLBC) in Chandigarh on Tuesday.
As per the debt swap scheme, 3% of total disbursements for agriculture should be earmarked for extending loans for swapping debt.
Banks in Punjab extended loans worth Rs 215.82 crore till March 2012 under this scheme against the target of Rs 1,234.21 crore. Similarly, in Haryana, loans totaling Rs 187.47 crore were extended against the target of Rs 1,014.88 crore.
The debt swap scheme has a mandate to swap farmers' debt taken from moneylenders with fresh banks' advances in order to bring them out of their clutches.
According to bankers, moneylenders or commission agents charge very high rate of interest up to 30% per annum from farmers against loans and farmers continue to repay debt throughout their lives.
Finding "unsatisfactory" performance of banks, SLBC convener Usha Ananthasubramanian, who is also ED of PNB, today pulled up several nationalised banks as well as private banks for not putting in their efforts to make this scheme a success.
Banks like SBI, Bank of Baroda, State Bank of Patiala, Canara Bank, ICICI Bank, Kotak Mahindra, Karnataka bank among others did not extend even a single penny from April 1, 2011, till March 2012 under the debt swap scheme in Haryana.
The performance of private banks in Punjab has also been quite dismal with regard to this scheme.
To turn this scheme into a success, SLBC in 2010 gave its nod to double the ceiling of loan under debt swap scheme from Rs 50,000 to Rs 1 lakh in Punjab and Haryana.
Both Punjab and Haryana government have vociferously been demanding enhancement in debt swap scheme limit in order to bring farmers out of the clutches of moneylenders.
Money lending is a flourishing business in Punjab and Haryana as farmers prefer taking loan from informal sources to banks because of ease in getting money.
"Farmers can get loan at any time from a money lender because he is easily accessible. Moreover, farmer can use the money anywhere as moneylender will not question him about the purpose of raising loan," a bank official said.
Another reason in slow progress in debt swap scheme has been reluctance shown by farmers in revealing their financial liabilities with money lenders, bankers said.