Banks express concern over decline in loan recovery

Banks today expressed "serious concern" over the decline in farm loan recovery even as the Punjab government sought from bankers to provide detail of 10.25 lakh beneficiary farmers as quickly as possible to give final shape to a loan waiver scheme, sources said.
In their first meeting with Punjab Finance Minister Manpreet Badal in connection with debt waiver, banks told the state government that the farm loan repayment plummeted after the announcement of debt waiver and warned the government that farmers would have to pay exorbitant interest if their accounts remained irregular for long.
"We expressed our concern with the state government about the loan recovery. We have told the government that loans should remain regular. If the repayments stop, then farmers will not eligible for interest subvention of three percent," said a bank official.

Banks also asked the state government to announce the cut-off date till which the debt waiver benefit will be available to eligible growers.
Notably, banks in Punjab had stopped fresh lending to growers who were making default in repayments in anticipation of debt waiver with loan recoveries plummeting by as much as 60 per cent in the state.
Meanwhile, under mounting pressure to implement farm debt waiver, the Punjab government asked the bankers to provide detail of 10.25 lakh beneficiary farmers as quickly as possible.

The state government wanted details of farmers including small and marginal farmers owning land up to five acres.

It also asked the banks to commence this exercise on campaign mode in coordination with district administration to cut any delay in the implementation of the debt waiver.
"We held discussions with banks and asked them to provide us the detail of 10 lakh beneficiary farmers. We want to know how many of them are small and marginal. We wish these modalities be worked out and in one month time, this scheme be implemented.
"We told banks to provide us the personal data pertaining to growers. Since it is not allowed to share personal data by banks, a consent form will be filled up by farmers, as suggested by banks, in which the data collected will be shared with the government," Badal told reporters after the meeting.

He said the banks should also come forward to settle the debt through one time settlement scheme.
During the meeting, T Haque, who is leading the expert panel to assess the quantum of agricultural debt and suggest ways and means for farm debt waiver, was also present.
As part of debt waiver plan, Punjab government had last month announced waiver of entire crop loans up to Rs 2 lakh for small and marginal farmers (up to 5 acres), and a flatrelief of Rs 2 lakh for all other marginal farmers, irrespective of their loan amount.
The move would benefit a total of 10.25 lakh farmers, including 8.75 lakh farmers up to 5 acres.

Though digging out detail of about 10 lakh farmers is a mammoth task, bankers have given consent to perform this job for implementation of debt waiver.
"Banks have agreed to share information about farmers with the government if the farmer fills up a consent form in this regard," said an official.
Banks will also share Aadhaar number of farmers with the state government, he said.
Banks during the meeting posed queries like how to implement debt waiver scheme in case of joint borrower account, land given on contract and future loan interest, the official said.
"We want to cut any delay in collecting information about 10 lakh accounts of farmers. It was also discussed that this exercise can be taken in campaign mode. Banks can hold camps with district administration to collect details of accounts," said a senior official of the finance department.

Asked whether banks would convert farm loan into term loan as sought by state government for debt waiver, an said the banks will stick to the guidelines of the Reserve Bank of India.
Chief Minister Amarinder Singh had met Union Finance Minister Arun Jaitley in Delhi on July 20, seeking one-time settlement of the Rs 6,000 crore loans taken by the state's farmers from the national and private banks.
Amarinder sought the Union minister's intervention to convert the Rs 6,000 crore loan into term loan by giving requisite directions to the Reserve Bank of India.
The Punjab government had proposed to own up Rs 9,500 crore as loan waiver to be settled with banks in 4 to 5 years time on the basis of interim report by the expert panel.