Kerala - Thiruvananthapuram

Real borrowers ‘denied’ waiver

THIRUVANANTHAPURAM: Hundreds of borrowers who have promptly repaid loans as well as others availing themselves of the one-time settlement scheme offered by cooperative banks have been left out of the debt waiver and debt relief scheme of the Centre.

Banking sources told The Hindu that many small and marginal farmers who had earnestly cleared their liability may have been deprived of the benefits. Such farmers mainly depend on the primary cooperative banks for loans.

Exclusion of genuine borrowers may create an impression that similar packages in future would be designed to benefit only wilful defaulters.

Loans worth Rs.2,518.12 crore pertaining to 11,00,923 borrowers have been waived under the scheme in the State. Lenders include commercial banks, Regional Rural Banks, Kerala State Cooperative Bank and Kerala State Cooperative Agriculture Rural Development Bank. On announcing the package, the cooperative banks in the State had sought Rs.2,250 crore for clearing farmers’ debts.

Subsequently, it was fixed at Rs.1,109.70 crore and the scope for easing the burden was limited. Long-term loans taken before March 1997 as well as short-term loans above Rs.1 lakh were excluded from the package.

As per the norms, the loans should have been disbursed between March 31, 1997 and March 31, 2007. They should have fallen overdue on December 31, 2007 and have remained unpaid till February 29, 2008.

So, a short-term loan disbursed up to March 31, 2007 for raising crops with a repayment period of 18 months was not included in the package if it had not become overdue on December 31, 2007.

Though the package appeared to be beneficial in the initial stage, it had a negative impact on the cooperative banks. The non-performing assets (NPAs) of the apex Kerala State Cooperative Bank (KSCB) had already touched 22.94 per cent in 2007 against the upper limit of 10 per cent fixed by the Reserve Bank of India.

According to KSCB president Koliyakode Krishnan Nair, “the bank has succeeded in bringing down the NPAs to 21.91 per cent. The aim is to bring them down to within the limits set by the RBI. We persuaded the small and marginal farmers to opt for one-time settlement and were able to recover around Rs.250 crore. But the norms announced by the Centre came as a rude jolt to those who repaid the agricultural loans even by taking personal loans. All such genuine borrowers, mainly farmers, have been left out of the package.”

Though Rs.1476.65 crore has been finalised at present, this will be reviewed in September.

The Centre is expected to refinance cooperative banks only in three instalments and the banks will have to bear the interest for the amount written off during the period. An advance refinancing package at an interest rate below 4 per cent is the best option, sources said.

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