Punjab co-op bank faces pile-up of Rs 5,300 crore as farmers not repaying loans
To help the farmers, the government is doing away with a clause in the Punjab Cooperative Societies Act which empowers the state to go for kurki (attachment) of land of defaulter farmers. The agenda is expected to be taken up in the meeting of the state cabinet on May 17.punjab Updated: May 16, 2017 23:08 IST
As the Punjab government has given a long rope to farmers in the state over paying back their crop loans, the Punjab State Cooperative Bank has witnessed a huge pile up of over Rs 5,300 crore in recoveries of loans.
The farmers had stopped repaying loans as in the run-up to the state assembly elections, the Congress steered by Capt Amarinder Singh had promised ‘karza kurki khatam’ (End to farm debt and attachment of land). Now when Amarinder has taken over as the CM, farmers are waiting for a waiver.
Immediately after the Congress government took over on March 14, it extended the deadline for loan recovery to March 31, which was again extended for another three months till June 30.
To further help the farmers, the government is doing away with a clause in the Punjab Cooperative Societies Act which empowers the state to go for kurki (attachment) of land of defaulter farmers. The agenda is expected to be taken up in the meeting of the state cabinet on May 17.
“Out of Rs 11,000 crore given to farmers during the previous two crop seasons (kharif and rabi), the bank could only recover Rs 5,700 crore. While farmers are using the Congress’ pre-poll promise as an excuse for not paying back loans, our recoveries are piling up,” said a Punjab State Cooperative Bank official.
Out of around nine lakh farmers who are regular borrowers from the bank, about 4 lakh (over 40%) have just refused to pay back. Earlier, 90% to 95% farmers used to pay back on time, as per the bank records.
A senior official in the bank revealed that pestering of farmers by the bank to make them repay loans has failed and farmers who even have paying capacity have refused to pay back.
FARMERS SEEKING FRESH LOANS
Adding to the bank’s woes, the farmers have started demanding loans for the forthcoming kharif season.
Banks officials are worried that due to huge default, the state cooperative credit system will be disturbed and the bank might face problems in giving credit for paddy sowing in the kharif season in June-July. Bank needs about Rs 7,500 crore as credit for the forthcoming kharif season.
The government had constituted an experts’ group, headed by former chairman of commission for agricultural cost and prices (CACP) T Haq, to explore ways for waiver of “all farm debts”.
The committee, which comprises eminent agricultural economists, has so far held only one meeting wherein one of the members asked “where would the money come from to waive off the entire debt.”
“The government needs time (to announce waiver). We have to differentiate between loan and debt. I think debt will be waived,” a top Punjab government official told HT, adding that the government would first reach out to the “most stressed section” of farmers, who are on the brink of taking the extreme step (of committing suicide).
RURAL DEBT PEGGED AT Rs 88,000 CRORE
Each farmer on an average has a debt of Rs 6 lakh, with the total rural debt pegged at Rs 88,000 crore. A portion of it is crop debt and the remaining belongs to social sector. “Usually most of the farmers pay back crop loan on time. Debt is what they overspend or they procure for weddings and other social needs,” said a bank functionary.
National Bank for Agriculture and Rural Development (NABARD) gives bi-annual grants to the state cooperative bank to further give loans to farmers.
NABARD offers loans at 4% interest rate and cooperative bank gives it to farmers at 7% interest. State government officials say NABARD is keeping a close watch on its policies. For forthcoming season, the state cooperative bank is expecting a grant of Rs 8,800 crore.