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LATEST NEWS UPDATES | 100,000 Maharashtra farmers may not get loan to sow kharif crop -Aparna Pallavi

100,000 Maharashtra farmers may not get loan to sow kharif crop -Aparna Pallavi

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published Published on May 26, 2014   modified Modified on May 26, 2014
-Down to Earth
 

Reserve Bank of India refuses to bail out three district cooperative banks

Kharif sowing season is close at hand, but around 100,000 farmers of Nagpur, Wardha and Buldhana districts in Maharashtra are unlikely to get agricultural loan or hailstorm relief from the District Central Cooperative Banks (DCCBs) because the Reserve Bank of India (RBI) has rejected banking applications of these banks. Worse, fixed deposits worth Rs 1,716 crore belonging to 1.5 million people, including farmers, are also in danger of being lost. The crisis has been precipitated by the state government's failure to release bailout packages for these banks on time.

At the end of financial year 2013-14, RBI had issued notices to the district banks regarding Rs 587 crore of unrealised dues. Most of these dues are from large industries like spinning mills, sugar mills and ginning-pressing units. The banks were hoping to manage the situation with the help of Rs 300 crore bailout package from the state government. But the decision, which was expected in March 2014, failed to materialise because the matter never came up for discussion at the last Cabinet meeting before the election code of conduct came into force.

Sources says the delay was the result of political rivalry between Congress and NCP MLAs of the ruling UPA, which had control over the banks. Meanwhile, the bailout figure has gone up to Rs 319 crore according to fresh audits, say sources.

Earlier, the state government provided bailout packages to DCCBs of Jalna, Dhule and Nanded districts in the state to the tune of Rs 183 crore. The failure to pay for three banks, all in politically weaker and neglected Vidarbha region, is seen by a section of political leadership as government's step-motherly attitude towards the crisis-ridden region.

Farmers, bank employees, depositors in red

Nagpur guardian minister Shivajirao Moghe has announced that a Rs 250 crore bailout package has been sanctioned by the state government. State cooperatives secretary, Rajgopal Deora, has written to RBI, requesting it to reconsider its decision cancelling the banking applications in the light of this fact. Meanwhile, banking operations are at a standstill since early May, and the fear of liquidation looms large over banks.

The situation has put farmers, depositors and 1,224 employees of these banks in a quandary. Others affected by the crisis are government employees, including teachers, whose salaries have not been released. The situation of farmers is especially critical, because 70 per cent farmers in the state avail loans from DCCBs. "Loans from nationalised banks are not easy to avail for farmers because these banks demand security for loans above Rs 50,000," says Gajanan Amdabadkar, leader of Shetkari Sanghatana and member of Jilla Parishad from Buldhana, "Most small farmers prefer DCCBs because they offer loans on terms that are suited to farmers' needs. Farmers who availed loans from DCCBs last year are stuck in a very tricky situation because nationalised banks will not give them loans until their earlier loans are paid off. What's more, farmers from one district cannot avail loans from DCCBs in other districts," he says. This year, loans worth around Rs 800 crore are expected to be held up in the process.

Apart from this, liquidation will also mean that work of more than 1,500 cooperative societies in the three districts, who have their money in DCCBs, will also come to a halt.

Corruption in cooperative banking

The cooperative banking sector in Maharashtra has long been riddled with corruption. In recent years, RBI has adopted a stern stance towards the Nagpur DCCB since irregularities worth Rs 157 crore by the then Congress MLA from Saoner and bank president Sunil Kedar came to light. Kedar was arrested for this.

Speaking to Down To Earth, Ravikant Tupkar, state president of the youth wing of Swabhimani Shetkari Sanghatana says, "Major outstanding dues in DCCBs can be traced to the bank directors and their relatives, all of whom are politically powerful. Government must immediately bail out the banks to protect the interests of small farmers and depositors, and take stringent steps to recover dues from powerful defaulters and take penal action against them."


Down to Earth, 23 May, 2014, http://www.downtoearth.org.in/content/100000-maharashtra-farmers-may-not-get-loan-sow-kharif-crop


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