 "Banks to handle the Telangana farm loan waiver")
The Telangana government has issued elaborate guidelines to implement the farm loan waiver scheme directly through banks while keeping its role to that of a facilitator.
The banks will have to prepare the list of eligible borrowers starting with the loan accounts at village and branch level according to the eligibility criteria fixed by the government. This will then be put to a multi-level scrutiny by lenders’ committees and government officials apart from taking the feedback from people by displaying the names of the beneficiaries in all the villages.
After consolidating the lists from all the districts, every bank will have to raise a claim with the government for reimbursement.
Regarding the eligibility criteria, the government has put a cap of Rs 1 lakh for each family (head of the family, spouse and dependent children) extending to short-term crop loans and crop loans taken against gold.
The Rs 1-lakh cap includes the interest amount chargeable on these loans. The names of the families that took multiple loans will be retained in the list in case the total outstanding amount does not exceed Rs 1 lakh. If the total loan outstanding is more than Rs 1 lakh, the name will be retained in the bank where the farmer family first availed itself of the crop loan or where the outstanding amount is higher with the latter being the priority, the government said in its orders. Loans repaid after March 31, 2014, are also eligible.
According to the guidelines, each bank branch will have to directly credit the amount into the crop loan accounts of farmers after the waiver amount is adjusted by the state government. Before crediting the amount, the banks will have to take a written undertaking from each beneficiary that s/he will repay the amount of waiver if it is found that the loan was fraudulently availed of or the said loan account was not eligible for a waiver.
Loans taken against pledge or hypothecation of agriculture produce other than standing crop, tied loans (tobacco and sugarcane crops) and closed accounts (dues cleared before March 31, 2014) are not eligible under the scheme. The state government said it would require around Rs 19,000 crore to fund the debt waiver programme.
Andhra Pradesh guidelines
Meanwhile, the Andhra Pradesh government issued its own guidelines for the loan waiver scheme, which is estimated to cost around Rs 43,000 crore to the state exchequer, today. AP is taking active part in compiling the eligible borrowers data. It has even commissioned a special software to identify multiple loans taken by a single family for the sake of enforcing the Rs 1.5-lakh limit per family under the scheme.
While the Telangana government has eliminated the tied loans from the scheme, the AP government has included the loans taken for tobacco and sugarcane crops. On the other hand, Telangana has included non-traditional plantation and horticulture crops while AP is not considering them. Also, AP is extending the scheme to the loans of women self-help groups (SHGs) while Telangana has not included them.
However, both Telangana and Andhra Pradesh governments are yet to create a fund for these schemes.
Budget provisions
Both the governments are planning to make provisions towards the scheme in the upcoming annual budgets. According to some reports, the Telangana government is expected to set aside Rs 10,000 crore in its first annual Budget to be presented in September.
AP initially wanted to make a token provision for the scheme in the Budget considering other budgetary obligations. However, sources told Business Standard chief minister N Chandrababu Naidu had asked the officials to examine a provision of Rs 5,000 crore in the Budget, which is to be presented later this month.
In the Telangana orders, the banks have been asked to sanction fresh loans to farmers immediately as the liability will be taken over by the government. However, a banking official said they could sanction fresh loans only after the government reimburses the old loans according to the existing norms.
The banks will have to prepare the list of eligible borrowers starting with the loan accounts at village and branch level according to the eligibility criteria fixed by the government. This will then be put to a multi-level scrutiny by lenders’ committees and government officials apart from taking the feedback from people by displaying the names of the beneficiaries in all the villages.
After consolidating the lists from all the districts, every bank will have to raise a claim with the government for reimbursement.
Also Read
The government has made the banks entirely responsible for the correctness and the integrity of the list of farmers eligible under the scheme apart from subjecting the books of accounts of every lending institution to an audit according to RBI and Nabard norms.
Regarding the eligibility criteria, the government has put a cap of Rs 1 lakh for each family (head of the family, spouse and dependent children) extending to short-term crop loans and crop loans taken against gold.
The Rs 1-lakh cap includes the interest amount chargeable on these loans. The names of the families that took multiple loans will be retained in the list in case the total outstanding amount does not exceed Rs 1 lakh. If the total loan outstanding is more than Rs 1 lakh, the name will be retained in the bank where the farmer family first availed itself of the crop loan or where the outstanding amount is higher with the latter being the priority, the government said in its orders. Loans repaid after March 31, 2014, are also eligible.
According to the guidelines, each bank branch will have to directly credit the amount into the crop loan accounts of farmers after the waiver amount is adjusted by the state government. Before crediting the amount, the banks will have to take a written undertaking from each beneficiary that s/he will repay the amount of waiver if it is found that the loan was fraudulently availed of or the said loan account was not eligible for a waiver.
Loans taken against pledge or hypothecation of agriculture produce other than standing crop, tied loans (tobacco and sugarcane crops) and closed accounts (dues cleared before March 31, 2014) are not eligible under the scheme. The state government said it would require around Rs 19,000 crore to fund the debt waiver programme.
Andhra Pradesh guidelines
Meanwhile, the Andhra Pradesh government issued its own guidelines for the loan waiver scheme, which is estimated to cost around Rs 43,000 crore to the state exchequer, today. AP is taking active part in compiling the eligible borrowers data. It has even commissioned a special software to identify multiple loans taken by a single family for the sake of enforcing the Rs 1.5-lakh limit per family under the scheme.
While the Telangana government has eliminated the tied loans from the scheme, the AP government has included the loans taken for tobacco and sugarcane crops. On the other hand, Telangana has included non-traditional plantation and horticulture crops while AP is not considering them. Also, AP is extending the scheme to the loans of women self-help groups (SHGs) while Telangana has not included them.
However, both Telangana and Andhra Pradesh governments are yet to create a fund for these schemes.
Budget provisions
Both the governments are planning to make provisions towards the scheme in the upcoming annual budgets. According to some reports, the Telangana government is expected to set aside Rs 10,000 crore in its first annual Budget to be presented in September.
AP initially wanted to make a token provision for the scheme in the Budget considering other budgetary obligations. However, sources told Business Standard chief minister N Chandrababu Naidu had asked the officials to examine a provision of Rs 5,000 crore in the Budget, which is to be presented later this month.
In the Telangana orders, the banks have been asked to sanction fresh loans to farmers immediately as the liability will be taken over by the government. However, a banking official said they could sanction fresh loans only after the government reimburses the old loans according to the existing norms.