KOLKATA: THE jumbo Rs 60,000-crore farm loan waiver package is on track and the finance ministry has asked all banks to get their act in place to offer fresh loans to eligible farmers right after June 30 — the deadline for implementing the scheme. Waiver of farm loans will make over four crore small and marginal farmers eligible for fresh loans.
Putting all speculation to rest, the finance ministry has informed banks that the guidelines for the scheme are in the “final stage of preparation” and would be issued by the month-end.
In the first-ever communication on the matter, issued on May 16, to all public sector bank chairmen, the ministry of finance has said: “The time bound manner of the scheme and its expansive coverage throughout the country requires adequate preparation by bank branches. In this light, I request you to issue suitable preparatory directions to all the bank branches under your control so that there is no time lag between the issuance of the guidelines and the starting of the implementation process of the scheme.” The letter is signed by Amitabh Verma, joint secretary in the finance ministry.
The ministry has sensitised banks on the issue of offering fresh loans to eligible farmers from July 1, 2008, without any time lag. The debt-waiver-cum-relief scheme was announced in Budget 2008-09. But the ministry took nearly three months to come up with some guidance to banks.
It has told banks to prepare separate lists for small & marginal farmers and other farmers at branch levels. The list would include the pattern of land holding, the eligible amount of loan and amount of waiver or relief. It has also advised banks to involve state level bankers’ committees and district level coordination committees for training of all nodal officers involved in the whole exercise.
Farm loans disbursed before March 31, 2007, which were overdue on December 31, 2007, and remained unpaid until February 29, 2008, would be eligible for both the loan waiver and one-time-settlement schemes.
In an earlier communication dated May 13, the ministry had urged banks to continue with normal agrilending exercise in “full swing” in a need-based manner. It is pertinent to note here that the ministry has increased the agricultural loan target to Rs 2.80 lakh crore for 2008-09, from around Rs 2.40 lakh crore disbursement in 2007-08.
Meanwhile, the government has told banks to allocate a minimum 3% of their fresh agri-loan disbursement for debt-swap facility to farmers, who are still now outside the institutional banking scope but indebted to unorganised money lenders. This one is aimed at freeing farmers from the jaw of money lenders, who charge exorbitantly high rate of interest for loans.
Accordingly, banks are preparing to offer soft loans to farmers having no access to bank loans, so that they can repay their high-cost debt to money lenders.
Farmers may not have to visit bank
THE government is working hard to keep the implementation of the farm loan waiver scheme real simple — so simple that the borrower will not be required to come to the branch for getting his loan waived, reports Priti Patnaik from New Delhi. While government is preparing guidelines for the scheme, the chances of identity fraud are not being ruled out. “The scheme is between the government and the bank. The borrower will not even be required to come to the branch in order to avail the waiver. It will all be settled in the bank’s accounts. Borrowers will automatically be eligible for fresh credit once all NPAs against their names are struck off,” a source close to the development said. Chances of identity fraud are not ruled out, he added. These banks have lakhs of small farm accounts on their books and they need adequate time to authenticate the beneficiaries of this scheme. While emphasizing that implementation will remain the key for the success of this scheme, the source said the bank must have a clear idea of who is eligible and who is not. However, the government is optimistic that the scheme will take off. There has been a lot of preparation and several issues with respect to implementation have been discussed thread-bare. “If banks follow the guidelines well, implementation will not be a problem," the source said.
