Nabard wrong in trying to recover waived loans

The recovery of loans in the banking industry is a legal issue. Once the loans are sanctioned and disbursed, no legal action is normally taken until the repayment is delayed or the accounts become NPAs.

But in a case where farmers were sanctioned loans by a district central co-operative bank through rural co-operative societies, Nabard raised objections about the sanctioning of the loans and later waiving them as per the Centre's loan waiver scheme implemented four years ago.

The case relates to 48,000 farmer members of 1,200 co-operative credit societies in Kolhapur district in southern Maharashtra.

Nabard (National Bank of Agriculture and Rural Development) has asked the Kolhapur district central co-operative bank (KDCC) to recover loans that were waived under the Centre's loan waiver scheme four years ago.

NABARD'S CONTENTION

But the farmers and co-operative societies are united in opposing the recovery of the waived loans. At a recent rally, societies and representatives of farmer members decided to embark on a massive agitation against Nabard and the KDCC bank for recovery of loans already waived.

Nabard has asked the KDCC bank to recover the loan amounts already waived under the scheme, and the bank has issued paper advice to the 1,200 credit co-societies in the district to debit the amounts in the accounts of the farmers concerned.

Four years after the loans were sanctioned, Nabard pointed out that the loans should not have been approved by the board of KDCC, as they were more than the prescribed limit.

Therefore, their waiver, too, was also not proper, argues Nabard. Hence, says Nabard, the loans should now be recovered.

The counter-argument is: The loans were sanctioned as per the bank's norms against the land assets and later waived as per the Centre's order. How can the same loans be recovered, that too four years later?

PASSAGE OF TIME

The then chairman of the KDCC bank, P.D. Shinde, in whose tenure the loans were sanctioned and later waived, said that the loans sanctioned and waived were as per banking norms and that Nabard had no legal right to recover them after four years.

The co-operative societies and farmer members have now been compelled to take to the streets against Nabard, while pressing for action against the KDCC bank, which is implementing Nabard's order.

The farmers have decided that a massive agitation would be staged against both Nabard and the KDCC bank by way of processions and representation to the higher authorities, and a token fast in front of the bank and State government's revenue offices.

It has also been suggested that the co-operative societies should not accept the debit advice issued by the KDCC bank, and should resort to non-cooperation with the KDCC bank. After the dissolution of the board, the KDCC bank is now under the control of the State-government-nominated administrator.

Sources close to the KDCC bank disclosed that Nabard had withheld reimbursement of the waived loans amounting to Rs 111 crore. With the amounts already waived and the Nabard not providing reimbursement as per the expected norms, the bank is in a crisis.

Nabard being the apex agriculture banking authority, banks are bound by its order. Hence, KDCC issued the relevant advice to the societies to debit the waived loans in the accounts of the farmer members.

The 1,200 societies are also in a crisis; loans to the farmers concerned have been denied. But is it legally proper that the loan amounts, already waived as per the Centre's loan waiver relief order, should now be reversed and debited to the farmers concerned?

As for the cooperatives, the reversed and debited amounts in the farmers' names need to be recovered if the accounts are to be corrected.

According to legal experts, even if the amounts are liable to be recovered, the legal recovery procedure should have been completed within a period of three years.

Nabard has no judicial right to order the recovery of the amounts which were waived four years ago.

(The author is a freelance journalist.)

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