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Resource centre on India's rural distress
 
 

Gotcha! Three sins of loan recovery
-The Telegraph

Bengal’s co-operation department spent the better part of Tuesday on an unusual mission: how to enforce Mamata Banerjee’s very chief ministerial order to nail those who tried to recover money lent by a co-operative bank.

“I have asked to lodge an FIR,” Mamata had declared yesterday while ordering the withdrawal of attachment notices on two farmers and announcing that the law will be changed to make government approval mandatory before rural co-operative banks can seize mortgaged property of defaulter-farmers.

Sources said that after the media conference yesterday, Mamata had instructed co-operation minister H.A. Safwi to lodge an FIR against those responsible for putting up the posters in East Midnapore’s Tamluk. The co-operative bank’s board is controlled by Trinamul Congress leaders.

However, the officials of the department were in a fix as they were unable to establish any basic violation of the law by the co-operative bank.

In the afternoon, hours of hair-splitting hit pay dirt. Much to their relief, the co-operation department officials concluded that some procedural lapses could be established.

Three transgressions were cited. One, a notice before the auction could be displayed only on the premises of the Tamluk Co-operative Agriculture and Rural Development Bank. But the bank officials put up the posters in the township, “which is not permitted”, an official at Writers’ said.

The procedures for sale under the West Bengal Co-operative Societies Rules do not mention posters. But the procedures do say “every proclamation for the sale shall be made at some place on or near such property by beat of drum and a copy of the proclamation shall be affixed on a conspicuous part of the office of the concerned bank or the society….”

A department official said the loan recovery authorities had “violated another procedure by including pictures of the defaulters in the posters. It is not permitted. The bank cannot put up picture of the defaulter in the locality as it could affect the normal life of the defaulter. This could lead to law and order problem in the areas where the posters were put up”.

Again, the law does not either specifically debar posters or say they can be put up.

The third charge: the bank did not mention the approximate value of the property being put on auction.

Here, the rule is unambiguous. The law says the proclamation should specify the “approximate value”.

An official of the bank said: “We decided to put up the posters so that the auction can be widely publicised. We also included photographs so that those interested in the auction can easily identify the owner of the property. We had plans to hire drum-beaters a day before the auction. It is not mentioned in the rules that posters cannot be put up.”

Sukumar Dey, the Trinamul MLA from Nandakumar and the government-nominated member on the bank board, sought to turn the tables on the co-operation department.

“The bank has followed all procedures. The auction order was issued by the registrar of co-operative societies and the ACRS (assistant registrar of co-operative societies of the district.) The auction was supposed to be conducted by the sales officers, who are inspectors of the co-operation department. They are not bank employees. So, if any action has to be taken, it should be taken against the co-operation department officials,” Dey said.

Eventually, a token complaint, not an FIR as the chief minister had said, was filed without naming any names.

Lost in the hair-splitting was a big concern: “This may hit plans to help farmers get rid of local moneylenders. The chief minister is trying hard to provide kisan credit cards to farmers so that they can get soft loans from the banks easily. If the banks are not allowed to recover loans, I have doubts that banks will disburse fresh loans to the farmers,” a minister said.

Most of the co-operative banks, which operate mainly where nationalised banks don’t reach, are facing a financial crunch because of unpaid loans. “These banks do not just give loans, they accept deposits also. If the banks become insolvent, how will the depositors get their money?” an official asked.

Already, a group led by the BJP has demanded that the interest due from defaulters should be waived.