Agriculture minister V S Sunil Kumar said that nearly 90 per cent of agricultural gold loans were cornered by non-farmers.

“The banks provide these loans without ascertaining whether the beneficiary is a farmer or even someone partly engaged in agriculture. This means that benefits exclusively meant for farmers are snatched away by non-farmers. This has forced genuine farmers to source money from micro finance institutions at exorbitant rates,” the minister said during the State Credit Seminar organised by NABARD here on Tuesday. He also found it scandalous that agricultural gold loan was disbursed mostly in Kochi and Kozhikode where agricultural activity is relatively minimal.

Only Rs 6,600 crore or just over 10 per cent of the Rs 49,000 crore provided as agricultural gold loan were availed of using the Kisan Credit Cards. “We need to find ways to increase disbursal through the Kisan Credit Cards. We also need to find out how farmers alone would benefit from such loans,” the minister said.

The generous terms of agricultural gold loans are designed for the needy farmers. The beneficiaries need to pay an interest rate of only four per cent. The Centre will make up for the loss by reimbursing the remaining 5 per cent of the loan. The State-Level Bankers' Committee figures show that Centre has allocated Rs 2,000 crore as interest subsidy to the agricultural loans in the state.

Fact is, most of the beneficiaries have no connection to agriculture. Some even deposit the loan as fixed deposits in banks to secure higher interest rates. The minister had earlier wrote to the RBI about the issue and he had sought the apex bank's intervention to mend the ways of the banks.

Sunil Kumar said that he himself had once tried to block others from enjoying the benefits of the agricultural gold loan. “The first group to protest were traders and businessmen,” he said. “This clearly means that traders and businessmen are the ones who are actually reaping the benefits of the agricultural loan scheme,” he added.

The SBI chief general manager S Venkataraman gave the bankers' side of the story. “Recovery is our biggest fear,” he said. “If some arrangement could be firmed up to assuage the fears of banks, we will be only too willing to provide loans to farmers,” he added. Venkataraman suggested a three-way collaboration involving the lender, the borrower and the government. Incidentally, SBI has one of the highest share of agriculture loans that are collateralised by gold loans.

The SBI CGM said that wherever recovery was high, the banks have not shied away from priority sector lending. “Lending to Kudumbashree units is a boon. The recovery rate is 90 per cent plus,” he said.

Venkatraraman also said that the diversion of agricultural gold loan was not a Kerala-specific phenomenon. “This is the trend in most of the southern states like Tamil Nadu, Karnataka, Andhra Pradesh and Telangana,” he said.

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