‘Loan waiver move is laudable, but reimbursement must be immediate’

The South Canara District Central Cooperative Bank (SCDCC) on Thursday welcomed the move to waive farm loans but urged the government to soon remit the amounts to be waived by the lending institutions.

Bank president M.N. Rajendra Kumar told reporters that if the government does not reimburse the money, it would affect future lending operations, that too when the agricultural season is starting.

He pointed out that as part of the Siddaramaiah government’s waiver of ₹50,000 per farmer, the SCDCC Bank has so far received only ₹181 crore, as against the total due of ₹380 crore. Delay in reimbursement would have a cascading effect on the operations of societies and the bank, he said. Mr. Kumar said the board of directors of the bank have discussed the implications of Wednesday’s announcement by Chief Minister H.D. Kumaraswamy about waiver of farm loans obtained between April 1, 2009 and December 31, 2017. “The board feels that while the intention is laudable, if the government fails to reimburse the waived amount, it will hit all future lending operations. Farmers require fresh funds for the forthcoming agricultural season,” he said.

He said 176 primary agricultural credit cooperative societies (PACCS) in undivided Dakshina Kannada have lent huge sums as agricultural loans. SCDCC Bank’s exposure to primary sector lending through PACCS is over ₹2,500 crore, including ₹1,265 crore lent by the bank to the societies. While some affluent societies have lent to farmers out of their own pockets, in addition to the bank’s funds, all operations would come to a grinding halt if the government fails to make the reimbursement immediately, he said.

Meanwhile, the bank also urged the government to reconsider the decision to keep elected representatives (directors of institutions) outside the purview of loan waiver, since they too are farmers and were elected on that basis only as directors.