The Hindu Business Line : Ensure loan waiver for all eligible farmers, banks told

Drafting code: The Finance Minister, Mr P. Chidambaram, with bank chiefs (from right) Mr. K.V. Kamath of ICICI Bank, Mr M.D. Mallya of Bank of Baroda and Mr T.S. Narayanasami of Bank of India at a function in Mumbai on Saturday.

Our Bureau

Mumbai, May 31 The Finance Minister, Mr P. Chidambaram, on Saturday asked public sector banks to ensure timely implementation of the farm loan waiver scheme and bring all eligible borrowers under the scheme.

In his meeting with PSU bank chiefs here, Mr Chidambaram said that banks must display details about the eligible borrowers for the full waiver and one-time settlement scheme by June 30.

Senior bank officials should inspect the lists to ensure authenticity.

Mr M.V. Nair, Chairman and Managing Director, Union Bank of India, said that banks will have to get the lists audited by their internal and statutory auditors. “As the Government will make the payment, banks must get the details checked by auditors,” he said.

The Finance Minister even asked the chiefs of the banks to visit branches to ensure smooth implementation of the scheme, if necessary, said Mr T.S. Narayanasami, Chairman and Managing Director, Bank of India.

written-off loans

In the latest guidelines issued on May 30, the RBI has clarified that the amount of loans written off (prudentially or actually) by the lending institutions will not be covered under the scheme.

“Such written-off loans shall neither be claimed from the Union Government nor will they be recovered from the farmer.

“However, the farmers whose loans have been written off (prudentially or actually) by the lending institutions will be eligible for fresh finance from the lending institutions,” the RBI said.

Following this clarification, there could be a slight downward revision in the amounts initially calculated by banks, Mr Nair said.

Once the banks put up their lists, the RBI and Nabard will monitor the progress of the implementation of the scheme on a daily basis up to July 31, and thereafter on a weekly basis.

Earlier in the day, the Finance Minister released the ‘Code of Bank’s Commitment to Micro and Small Enterprises’ brought out by the Banking Codes and Standards Board of India in collaboration with the Indian Banks’ Association.

Code of rights

The code is a charter of rights of the micro and small enterprises and lists their obligations vis-a-vis their banks.

“The code will increase transparency on banks’ interest rates and other charges, disbursement of loans and other services, parameters of credit assessment, and obligations of borrowers and banks. It also deals with debt restructuring for such enterprises as well as complaints,” Mr Chidambaram said.

Moneylenders role

The Finance Minister said that micro and small enterprises have been dependant on moneylenders who charge usurious interest rates.

“In urban India, especially, it would be a tautology to call them unscrupulous moneylenders,” Mr Chidambaram said.

Just like the SME sector, micro and small enterprises are big employers and many in rural and semi-urban India are sustained by such enterprises, he added.

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Ensure loan waiver for all eligible farmers, banks told