The National Bank for Agriculture and Rural Development (NABARD) has raised serious objections about the functioning of the Punjab Gramin Bank, saying it has been giving credit to farmers for four crops of potato a year, even as it is not part of the cropping pattern in the area and also doesn’t find mention in land records.
A general manager-rank officer of NABARD, who reviewed the state rural bank’s working, said bulk of the farm credit has gone for potato and other vegetables as they have highest amount of ‘scale of finance’ (money required for raising a crop per unit cultivated area).
For potato, the scale of finance is ₹45,000 per crop, ₹40,000 for vegetables, ₹23,000 for wheat and ₹26,000 for paddy.
Having issued a set of remedies to the rural bank, NABARD’s scrutiny revealed the system of appraisal of loan proposals by the bank was not satisfactory as the branch managers did not assess the proposals’ financial viability, applicants’ repayment capacity and their creditworthiness.
The bank also failed to maintain the payment schedule, number of instalments, due dates and loans were sanctioned irrationally without assessing the land farmers were tilling.
“Also the total credit is being disbursed in one go whereas it should be given in four instalments before crop sowing. This rash disbursement of loans to the farmers was adding to their debt,” pointed the NABARD.
{{/usCountry}}“Also the total credit is being disbursed in one go whereas it should be given in four instalments before crop sowing. This rash disbursement of loans to the farmers was adding to their debt,” pointed the NABARD.
{{/usCountry}}Punjab farmers owe ₹90,000 crore to various banks. NABARD has advised the state rural bank to ensure that cropping pattern is followed in the area before loan disbursement.
The number of Punjab Gramin Bank branches has gone up to 410 after the recent merger of the Malwa Gramin Bank into it.
Nearly 50% of its working capital comes from NABARD, 35% from the sponsor bank (Punjab National Bank) and 15% comes from the state government. Each branch has 800 to 2,500 farmers attached to it .
“NABARD inspection is a regular process of the bank’s functioning. We keep making corrective measures. Credit to the farmers is given on the basis of their requirement,” said Punjab Gramin Bank chairman SK Dubey.