Nagpur: The state's loan waiver scheme is forcing banks to waive off part of some farmers' loans without getting anything from the government. The banks can only write off the balance.
As details of the scheme become clearer each day, banks are not amused. This situation happens in cases where a farmer has taken loans from more than one bank.
For example; if Farmer X has taken loans of Rs3 lakh each from three different banks. Under the waiver plan, state government is supposed to pay up to Rs1.5 lakh only, for all three loans. If the government's share is exhausted in the first two banks, the third bank will not get anything out of the Rs1.5 lakh government payout. But it will still have to waive off the pending dues by simply writing it off, or accept whatever amount the farmer pays up.
This is because the government has come up with a concept of minimum expected recovery (MER) for the waiver scheme. The MER comes to anywhere between 35% to 85% of the principal amount, and is taken as the amount for waiver. In cases where there is no government contribution, farmers can still pay according to MER and clear their dues.
The discounted amount calculated as MER has to be paid till March 2018. The rest will have to be written off by the banks, said sources.
Bankers say the problem is being faced in loans above Rs1.5 lakh, for which one time settlement (OTS) scheme was released last week. The scheme has been approved by 11 banks, which include the major ones.
"There are a number of cases where farmers have taken multiple loans, and have sought waiver for each. This leaves a chance that one of the banks will get nothing from the government. Some times, only part of the Rs1.5 lakh is received from the government," said a banker.
The waiver scheme also takes the entire family as a single unit. So, there are chances that the limit may have been exhausted in the wife's loan, then the husband, who has also applied for waiver, would not get anything. Under the scheme, preference will be accorded to women, added a source.
However, bankers also fear that farmers may not come forward to pay even the discounted amount calculated under MER formula. Such accounts will remain NPAs in the bank accounts.
In the sheets with 15-20 borrowers each, no amount is payable from the government in half the cases, added a banker. "The guidelines were issued a few days ago, and the banks are confused about how to go about in such cases. But we have to go by the state government's directions," said a source.
MANY FARMERS HAVE MULTIPLE LOANS
Issues coming up during implementation of loan waiver scheme also throw light on how farmers have been taking loans from multiple banks. Bankers say this can be due to different reasons. Those with large holdings can offer different land parcels as security to each bank and get a loan.
A bank's charge on a land is noted by the revenue department. For loans up to Rs1 lakh, no charge has to be noted, so a farmer can easily get multiple loans up to that amount, explained a banker. If the land is mutated, which means transferred from father to son, the bank's charge is not reflected in the new owner's documents. So, even if the father had a loan earlier, the son can get fresh credit after transferring the land to his name, said a banker.
Since the scheme takes a family as single unit, loans taken by different members may be shown as one, appearing as multiple loans by an individual, a banker said.
