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Don't take coercive steps against farmers for loan recovery: SC to banks

And it adds that in such cases, government should intervene

Press Trust of India  |  New Delhi 

Don't take coercive steps against farmers for loan recovery: SC to banks

Financial institutions should not resort to coercive action for recovery of loans from farmers in case of crop failure and the government should intervene in such cases, the said on Friday.

The apex court said the government's approach should be preventive rather than compensatory and it should "travel the last mile" to reach out to the farmers.


The remarks were made by a bench of Justices and A M Khanwilkar while dealing with a public interest litigation (PIL) filed by farmers from

"Financial institutions should not resort to coercive action for recovery of loans from farmers in case of crop failure. [The] government should step-in if there is any coercion," the bench said.

The apex court said that government's job is to prevent farmer's suicides and not to distribute compensation.

It said that government's approach towards the agrarian crisis should be preventive, rather than compensatory.

The bench asked Additional Solicitor General P S Narasimha to devise a mechanism where farmers can go to the government seeking help if financial institutions take coercive action against them for loan default due to crop failure.

It said the government should take the administrative action to get rid of the middlemen, who purchase produce from farmers at throwaway prices and buy their crops at least on minimum support prices.

Narasimha said the present situation has undergone a sea change from earlier times, with the government bringing in (PMFBY) by which farmers are compensated at a minimum premium.

He said under the insurance scheme now, the burden of premium was being shared by both the state and farmers.

To this, the bench retorted saying it does not want to know about insurance business, but common sense and prudence say that in the present case, it cannot be a premium-based business and such a stand should not drive the government's policies.

The ASG said that government has devised multi-pronged strategy to increase the income of farmers and ensure their security by insurance scheme.

"Job of the executive is to ensure that farmers suicide does not happen. It should be dealt just at the ground level. This should not happen at all," it said.

Narasimha said there are Reserve Bank of India guidelines to the banks for re-collection of loans in case of the

One of the counsels representing farmers said they commit suicide when banks or financial institution like cooperative societies resort to coercive actions for even small loan defaults, which hurt their dignity.

Amicus curiae Gopal Shankar Narayan supported the arguments and said it cannot be denied that financial institutions resort to coercive action at the ground level.

The bench said that coercive action by financial institutions cannot be taken by the suspension of a process of law.

The bench posted the matter for further hearing on August 4, asking the state government to file a detailed reply.

The apex court had on May 3 said that there should be "affirmative action" of the government to provide relief to the families of those farmers who committed suicide.

The court made it clear that it is not treating the plea seeking relief for farmers in the state as adversarial but participatory and would not go into the figures of farmers who have committed suicide.

The apex court had asked the state government to specify the steps taken to create awareness on (MSP) on 26 crops so that farmers do not rely on middlemen who come at their doorsteps to sell their produce.

It had also asked the government to inform it about steps it intended to take to set up mandis and open procurement centres on time within the acceptable radius to farmers.

The state government had said that steps are being taken to set up awareness camps and measures have also been taken to have mandis which are easily accessible.

The government had earlier told the court that a total of 30 farmers have committed suicide across the state in 2016-17 and it was taking appropriate measures to deal with the situation.

An affidavit filed by the state government before the apex court said that the kin of 82 farmers, including the 30 farmers who have committed suicide, have been given Rs 3 lakh each as ex-gratia from the Chief Minister's Relief Fund.

It had said according to the reports compiled from information given by district collectors, 52 of the listed 82 farmers had died of various other reasons, but not committed suicide.

The affidavit said has faced the most severe drought in over 100 years and was adopting a proactive approach towards farmers it extended crop loans to the tune of over Rs 4,000 crore to over seven lakh farmers in 2016-17.

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