The Hindu Business Line : Banks, co-ops told to submit details of overdue farm loans

Kolkata, March 10 The Reserve Bank of India has asked all public sector banks to submit by March 14 comprehensive list of dues from small and marginal farmers and other borrowers of agricultural loans. The National Bank for Agriculture and Rural Development (Nabard) too has asked all co-operative banks and regional rural banks (RRBs) to submit similar lists by March 14.

This, say banking industry sources, is the first concrete step taken to implement the Rs 60,000-crore farm loan waiver announced in the 2008-2009 Union Budget.

According to the sources, of the total Rs 60,000 crore of loan waiver announced, an estimated Rs 37,000 crore is accounted for by the co-operative banks, making this sector the most hard hit, followed by RRBs (Rs 16,000 crore) and the commercial banks (Rs 12,000 crore).

“We’ve received the RBI’s communication in this regard and we’re working on it,” Mr S.K. Goel, Chairman and Managing Director of UCO Bank, told Business Line.

“We hope to complete our exercise as early as possible,” Mr Goel said, estimating the bank’s dues from small and marginal farmers and others at around Rs 500 crore.

“We received an e-mail from Nabard on Saturday containing the notification to submit names of defaulters and amounts of default along with landholding figures and other details,” said Mr Samir Ghosh, Chairman, The West Bengal State Co-operative Bank. “Though it is difficult to come up with such a detailed list at such short notice, we are determined to meet the deadline.”

Mr Ghosh was speaking on the sidelines of the Central Co-operative Banks’ conference held in Krishnanagar, about 120 km from here, on Saturday.

‘Only estimates’

The West Bengal State Co-operative Bank along with 17 Central Cooperative Banks and 5,700 Primary Agricultural Cooperative Society (PACS) is slated to receive around Rs 610 crore from the RBI in this regard. Of this, Rs 373 crore is the overdue principal from crop loans, Rs 100 crore is the overdue principal from allied agricultural loans and the balance overdue interest, he said. Out of the total 1.5 million of the bank’s borrowers, 400,000 are loan defaulters, he added.

No clear guideline

However, since there is no clear guideline as to from when the calculations are to be made, a lot of these figures are mere estimates, Mr Ghosh said.

“The Finance Minister has said that loans which have been disbursed till March 31, 2007, have fallen overdue as on December 31, 2007 and have remained unpaid as on February 29, 2008 will be waived. But from when the calculations are to be made is unclear.”

Mr Ghosh referred to the Finance Minister’s announcement that ‘equivalent liquidity’ would be given to the banks in three instalments over a period of three years and said: “If the amount is not given to us in lumpsum cash, we will face a huge liquidity crunch with fresh loan demands of Rs 2.5-3 crore destined to flow in after June” .

Till December, about 26 per cent of farm loans, amounting to Rs 225 crore, have been repaid, Mr Ghosh said. “We propose that the small and marginal farmers who have repaid in time be given back their loan amount. Otherwise, it will hurt the positive loan repayment culture that West Bengal has developed over time,” Mr Ghosh said.

More Stories on : Public Sector Banks | Farm credit | Co-operatives

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