Published On : Wed, Jul 22nd, 2015

‘Don’t compel banks to give farm loans’, Central govt tells Maharashtra

Mumbai/Nagpur: In an embarrassment to the ruling BJP-Shiv Sena combine in Maharashtra, the central government has written to the state asking it to desist from compelling banks to extend farm credit, official sources here said on Wednesday.

The letter, dated July 8, has been sent by union Finance Secretary Hasmukh Adhia to state chief secretary S. Kshatriya – barely a couple of days after Maharashtra Chief Minister Devendra Fadnavis warned that bank managers who do not extend farm credit would be prosecuted.

The central communication comes barely a month after the state government filing a first information report against Santosh Kumar, manager of the Morshi, Amravati branch of the nationalised Bank of Maharashtra, who was booked by police for being allegedly responsible for a farmer’s suicide as no further loan was sanctioned by him.

In his letter, Adhia has termed the move as ‘catastrophic’ and referred to the criminal action being lodged against at least 10 nationalised and 14 cooperative banks in Akola, Bhandara, Chandrapur and Yavatmal districts “for not achieving agriculture disbursement targets”.

“While we appreciate the need for banks to be sensitive and responsive to the needs of farmers, particularly in times of distress, the idea of using criminal act for such matters is catastrophic. It is certainly not going to achieve the purpose for which it is being used,” Adhia said.

On the contrary, he expressed apprehension in the sternly-worded letter that this could result in complete non-cooperation of all the bank employees with ‘unintended consequences’. He asked Kshatriya to direct all district collectors and the police in the state “to refrain from using any such criminal sections for the purpose of pressurising banks” to sanction loans to agriculturists.

In April, addressing the 80th anniversary of the Reserve Bank of India, Prime Minister Narendra Modi had urged banks to be considerate while giving loans to farmers, saying they would not shut down by helping them.

Welcoming the central government’s move in Yavatmal, Vidarbha Jan Andolan Samiti president Kishore Tiwari said though the nationalised banks have completed their targets of extending farmland credit, “the main problem lies with the Maharashtra government which has yet to act seriously” in the matter.