Unions Fear Bank Officers May Be Hauled Up If Farm Loans Turn Sour

The four officers’ unions in state-owned banks have jointly written to the Indian Banks’ Association (IBA) expressing apprehension that their members may be hauled over the coals if the loans given to small and marginal farmers (SMFs) during the two-week campaign (February 10 to 24) turn sour later on.

The fear of the unions stems from the fact that the campaign for saturating Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) beneficiaries with Kisan Credit Cards (KCC) has been undertaken in the off season for crop cultivation in major areas.

Diversion of funds

Hence, they alleged that rural and semi-urban (RUSU) branches were forced to sanction KCC without standing crop, which could lead to the diversion of funds. They added that due to staff shortage at these branches, it is difficult to ensure the end use of funds.

PM-KISAN was launched in December 2018 to augment the income of SMFs. KCC allows farmers to meet their short-term credit requirements for cultivation of crops, post-harvest expenses, consumption requirements, working capital for maintenance of farm assets and activities allied to agriculture, and investment credit requirement for agriculture and allied activities.

Since the KCC accounts have been sanctioned in the off crop season, the four unions – All India Bank Officers’ Confederation, All India Bank Officers’ Association, Indian National Bank Officers’ Congress and National Organisation of Bank Officers – underscored that these accounts are not eligible for crop insurance coverage under the Pradhan Mantri Fasal Bima Yojana (PMFBY) scheme in a majority of the areas.

Double financing

The unions alleged that many KCC borrowers do not utilise their loan funds for productive purposes and, hence, fail to arrange the money to repay loans. They also expressed fear that some farmers could have approached a number of bank branches by producing different land documents, resulting in double financing.

Since, on an average, each RUSU bank branch had to sanction a minimum of 1,000 accounts during the campaign period, the unions said it was well-nigh impossible to conduct pre- and post-sanction inspections for KCC accounts.

To highlight their concerns on loans granted under special drives, the unions cited the experience of disbursing Mudra loans (up to ₹10 lakh to non-corporate, non-farm small/micro enterprises).

They alleged that bank managements exerted pressure to achieve the targets under the Pradhan Mantri Mudra Yojana, whereby many officials were forced to disburse loans without adequate assessment. They emphasised that this resulted in quick mortality of the loans.

Further, disciplinary action has been initiated against many officials for the ‘lapses’ committed during the Mudra campaign, the unions added.