Published On : Fri, Mar 11th, 2016

Farm loan fraud : RBI orders probe into ‘fake targets’ by banks

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Nagpur: The alleged fake claim of achieving targets of lending to farmers and agro-sector has now fallen under the scanner of Reserve Bank of India which has on Friday ordered probe into the allegations of irregularities committed by public, private and foreign banks.

State run body Naik Sheti Swawalamban Mission has previously submitted the list of alleged farm loan frauds, following which RBI made the move.

The finance ministry had forwarded the VNSSM complaint to the Chief Vigilance Officer of RBI after which the probe was initiated, said VNSSM President Kishore Tiwari, who enjoys the rank of a minister of state.
“It is shocking that due to failure of banks to implement the RBI Targeted schemes, farmers and agro-sectors are suffering and the country has witnessed lakhs of farmland suicides, including over 25,000 in Maharashtra alone, in the past decade,” Tiwari said.

He said that as per RBI’s guidelines, all banks in the country were given a specific target of lending 18 percent of Adjusted Net Bank Credit or credit equivalent of Off-Balance Sheet Exposure, whichever is higher, to the agro-sector and farmers.

However, a study by the VNSSM revealed the massive alleged irregularities and frauds perpetrated by the concerned banks merely to tom-tom achievements of targets and sub-targets, thereby defeating the purpose of benefiting the farmers and agro-priorities sectors, Tiwari said.

The modus operandi reportedly involved forming fictitious farmers’ Joint Liabilities Groups with fraudulent documents in the name of the farmers. The disbursements of crores of rupees of agro-credits never reached them though the targets were shown as ‘achieved’.

Similarly, paper-borne schemes of agro-finance against collaterals of agricultural lands of the farmers at subsidized interest rates were shown, but immediately the entire amounts were turned and put in fixed deposits at higher interest rates, Tiwari said.