Ruchika M Khanna

Tribune News Service

Chandigarh, November 19

The Reserve Bank of India (RBI) has found some private banks guilty of having given excess agriculture loans worth Rs 17,600 crore. These banks then claimed interest subvention on the money disbursed as crop loans.

The loan amount sanctioned by the banks was more than the actual value of crops sold each year. The issue was first brought to light by the state government in June, which asked the Union Ministry of Finance to probe how private banks had advanced excess loans beyond their scale of finance to farmers in Punjab.

The state government while preparing its data on small and marginal farmers eligible for debt relief offered by the Amarinder Singh government had found that over 4 lakh farmers in the state got crop loans (which are working capital loans) between Rs 2 lakh and Rs 5 lakh and over one lakh got loans of over Rs 5 lakh. Under the laid norms, a marginal farmer (having less than 2.50 acres) cannot avail a loan of more than Rs 1 lakh (at Rs 40,000 per acre) and a small farmer is not eligible for a loan of more than Rs 2 lakh. The excess loan extended to these farmers was found to be around Rs 17,620 crore.

Following the complaint made by the state government, the RBI got a study conducted through its Financial Inclusion and Development Department. On October 23, the RBI had informed the State-Level Bankers Committee (SLBC) that some banks in Punjab were not undertaking proper due diligence while sanctioning crop loans and had financed way beyond the prescribed scale of finance.