Kerala - Alappuzha   

Loan waiver: ryots, banks in a dilemma

ALAPPUZHA: The Union budget proposal on waiver of agricultural loans has created some kind of confusion among bankers here. The exact nature of the waiver is what has put farmers and bankers in a quandary.

Though the Union Finance Minister announced that all agricultural loans up to March 31, 2007 and overdue as on December 31, 2007 would be covered under the scheme, bankers here say the March 31-clause is misleading and would create problems.

“If we have to consider a loan taken, for instance on March 31, 2007, as overdue, we have to wait till March 31, 2009. This is because a farmer who takes an agricultural loan gets two years to repay it. The actual repayment period is the second year, because the first year is the cultivation period and he does not have pay any money during that time. If he does not repay his loan by the end of the second year, only then can we consider it as overdue,” a bank official explains.

“The problem arising out of this is that many farmers who took loans up to March 31, 2007, and whose actual repayment period might not have even begun would not repay the loan citing the waiver. Many others too will try to avoid repaying agriculture loans that are not eligible for the waiver,” he fears.

Farmers, on the other hand, are worried over loans taken from micro-finance companies and private money-lenders. Though cooperative credit institutions have been included in the waiver, there are many societies in Alappuzha that have shut shop after turning bankrupt.

Farmers who took loans under bank-initiated schemes, the Annapurna scheme of the State Bank of Travancore for instance, which is not supported by the Government, too are a worried lot. SBT officials said loans worth Rs.9.5 crore had been disbursed under this scheme in Kuttanad alone.

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