Tuesday’s State Level Bankers Committee (SLBC) meeting decided to constitute a subcommittee to study the Agriculture Department’s demand that all land under agriculture in the State should be offered protection as per law under Section 31(i) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act.
The panel will have representatives of the Reserve Bank of India, NABARD, SLBC, and the State government.
Section 31(i) exempts agricultural land from the provisions of the SARFAESI Act. But in Kerala, banks ‘misinterpret’ the law to mean only paddy fields, Agriculture Minister V.S. Sunil Kumar alleged.
“Paddy fields constitute only 2.20 lakh hectares plus another 90,000 hectares lying fallow. On the other hand, coconut farming covers 7.5 lakh hectares and rubber 11 lakh hectares. Other agricultural crops cover several lakhs of hectares. But the exemption from the Act is offered only to paddy land. This is a violation of the Act,” he said, urging the banks to take corrective measures.
On their part, banks denied that such a distinction existed. On the other hand, at the time of applying for a loan, the land is usually shown as non-agricultural in nature. The claim that it is in fact agricultural land crops up only at a later stage, such as in the event of recovery measures, the banks said.
Also, in revenue records, land is distinguished as only dry land or wetland, and not whether it is agricultural or non-agricultural, they said.
S.M.N. Swamy, Regional Director, RBI, said there appeared to be a grey area in this issue. Clarifications would have to be requested as it was the first time that the issue had been raised.
Agri gold loans
Mr. Sunil Kumar demanded stern measures to curb the misuse of the low interest-rate agricultural gold loans.
He reminded banks that these loans were meant for farmers. But in reality, farmers were being deprived of the money as the banks are issuing the loan to non-farmers. He urged bankers to either issue these loans on the strength of Kissan Credit Cards, or on certification issued by agricultural officers.