State govt offers to replace farmers as borrowers of banks

Nagpur: State government that stopped implementation of Jyotiba Phule farm loan wavier scheme midway due to financial crunch that followed Covid outbreak, now wants banks to clear the remaining dues by passing a book entry and show the amount as receivable from the state government instead.
Such amount will be treated as loans by the bank to the Maharashtra government for tiding over paucity of funds it is facing. This means the banks will clear the farmers’ loans that were due in their books and the state will replace the farmer as the borrower. This will qualify such farmers for getting fresh crop loans.
In turn, the state government has offered to provide a deed of declaration that the dues will be cleared with interest before September 30. In case of failure, the banks can stake their claim through legal process. The interest will be calculated from April 1.
Farmers need short term crop loans every season to meet sowing expenses. A new loan is not granted until the earlier dues are cleared. Loans of as many as 11 lakh farmers who were covered under the waiver could not be paid by the state due to financial crunch.
The state has directed cooperative banks not to consider such accounts as NPAs and grant fresh loans. This cannot be done for the commercial banks as they are governed by RBI and are not under the state government.
It is expected that now the commercial banks will give fresh loans to such farmers on the basis of the deed of undertaking, a source said. A draft deed of undertaking has been submitted to the state level banker committee (SLBC) through which it is expected to reach to the banks. In the state the SLBC is headed by Bank of Maharashtra.
The state has offered to provide the undertaking to only those banks that would agree to provide fresh loans to the farmers covered under waiver scheme. The draft deed says state will pay the interest from April 1 to September 30 or the actual date of payment. One of the clauses also mentions the repayment will be done before September 30.
(In a Nutshell)
The MVA government had come up with a waiver scheme covering farm loans upto Rs 2 lakh.
Around 32 lakh farmers were covered under the scheme
Govt could clear dues of only 19 lakh
The rest were left out as state ran out of funds following Covid outbreak
Now it offers banks an undertaking to repay the loans before September 30
Against the undertaking, banks are expected to grant fresh loans to farmers