Agri loans to corporates
Government banks handed out Rs 58,561 crore to 615 accounts in agricultural loans in the year 2016. On average, each account has been given over Rs 95 crore in agricultural loans. This information was revealed by the Reserve Bank of India in response to a Right to Information (RTI) application. This is something that has been going for years and a classic misuse of Govt schemes. Where is the agriculture ministry thats supposed to monitor all this?
Per the founder of the farmers’ organisation Rythu Swarajya Vedika, said, “Many big companies involved in agri-business are taking loans under the agricultural loans category. Companies like Reliance Fresh come under the agri-business company category. They engage in the buying and selling of agricultural produce, and take loans under the agricultural loans category for the construction of godowns or other such related activities.”
In order to give top priority and ensure the development of some economic sectors in the country, the RBI has issued a directive to banks that they invest a fixed part of their total loans into sectors like agriculture, micro, small and medium enterprises, export credit, education, housing, social infrastructure and renewable energy. This is called priority sector lending (PSL).
According to the PSL policy, banks are required to hand out 18% of their total loans to the agricultural sector, targeting small and marginalised farmers. Veesa told The Wire, “The problem is that banks are giving a big percentage of this to corporate and big companies, as a result of which farmers are unable to avail these loans.”
He further stated, “Actually, it is pretty easy for big companies to take loans under the PSL policy as the regulations around giving the loans are lax and the interest rate is also quite low compared to general loans. Banks hand out big loans so that their resources remain intact.”
The Wire also filed RTI inquiries in all zonal branches of the State Bank of India for state-wise data, but no branch except the Mumbai zone revealed the information. SBI Mumbai zone stated that the Mumbai City branch – one of the richest localities in Mumbai – has given out Rs 29.95 crore in loans to three accounts.
Going by these numbers, each account has been given almost Rs 10 crore on average in loans, whereas in the same branch, more than Rs 27 crore have been given in loans to nine accounts. However, the bank did not provide information on the names of the beneficiaries of these loans.
According to some experts, banks also stand to benefit from this whole process, and that is why such massive loans are being given under the agricultural loans category. “Here, Rs 100 crore can easily be given to a company. If the same amount were to be given to farmers, at least 200 people would be required. Banks are giving out such massive loans so that their resources are depleted less and the target of 18% can be achieved soon.”
Data from the RBI reveals that massive amounts have been given to people in the name of agricultural loans even before 2016. In 2015, 604 accounts received Rs 52,143 crore, which comes to Rs 86.33 crore per account, whereas Rs 60,156 crore (at an average of Rs 91.28 crore per account) was given in agricultural loans in 2014. The same method was being followed during the UPA government as well.
Full report
https://thewire.in/agriculture/modi-govt-gave-agricultural-loans-worth-rs-59000-crore-to-615-accounts-in-one-year more
Per the founder of the farmers’ organisation Rythu Swarajya Vedika, said, “Many big companies involved in agri-business are taking loans under the agricultural loans category. Companies like Reliance Fresh come under the agri-business company category. They engage in the buying and selling of agricultural produce, and take loans under the agricultural loans category for the construction of godowns or other such related activities.”
In order to give top priority and ensure the development of some economic sectors in the country, the RBI has issued a directive to banks that they invest a fixed part of their total loans into sectors like agriculture, micro, small and medium enterprises, export credit, education, housing, social infrastructure and renewable energy. This is called priority sector lending (PSL).
According to the PSL policy, banks are required to hand out 18% of their total loans to the agricultural sector, targeting small and marginalised farmers. Veesa told The Wire, “The problem is that banks are giving a big percentage of this to corporate and big companies, as a result of which farmers are unable to avail these loans.”
He further stated, “Actually, it is pretty easy for big companies to take loans under the PSL policy as the regulations around giving the loans are lax and the interest rate is also quite low compared to general loans. Banks hand out big loans so that their resources remain intact.”
The Wire also filed RTI inquiries in all zonal branches of the State Bank of India for state-wise data, but no branch except the Mumbai zone revealed the information. SBI Mumbai zone stated that the Mumbai City branch – one of the richest localities in Mumbai – has given out Rs 29.95 crore in loans to three accounts.
Going by these numbers, each account has been given almost Rs 10 crore on average in loans, whereas in the same branch, more than Rs 27 crore have been given in loans to nine accounts. However, the bank did not provide information on the names of the beneficiaries of these loans.
According to some experts, banks also stand to benefit from this whole process, and that is why such massive loans are being given under the agricultural loans category. “Here, Rs 100 crore can easily be given to a company. If the same amount were to be given to farmers, at least 200 people would be required. Banks are giving out such massive loans so that their resources are depleted less and the target of 18% can be achieved soon.”
Data from the RBI reveals that massive amounts have been given to people in the name of agricultural loans even before 2016. In 2015, 604 accounts received Rs 52,143 crore, which comes to Rs 86.33 crore per account, whereas Rs 60,156 crore (at an average of Rs 91.28 crore per account) was given in agricultural loans in 2014. The same method was being followed during the UPA government as well.
Full report
https://thewire.in/agriculture/modi-govt-gave-agricultural-loans-worth-rs-59000-crore-to-615-accounts-in-one-year more
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View all 16 comments Below 16 comments
Why someone has to monitor, the loan processing banking officials are provided with guidelines . WHO WILL MONITOR WHOM. That means no one is trust worthy. Till some one says it is wrong Don't they know right or wrong? Everyone knows everything. Those who have stick, owns the buffalo. more
Sep 17
In a totally corrupt system, established for those in power to loot the country and being run by corrupt bureaucrats.bankers, without any political will to fight the menace but rather the opposite, there can be nothing done against this. more
Sep 16
We Indians have got so used to politicians using our hard earned tax money to waive loans made to farmers, that we think it is a crime for someone in agribusiness to take loans for agribusiness and repay the loans on time. This builds up required food chain infrastructure, and sets up a direct sales channel from the farmer to the retail businessman like Reliance. This is a very important service, which helps farmers to sell their products at agreed prices. Instead of giving loans to farmers who know they need not repay their loans, even if they can (as most farmers can), the only solution is to reduce the need for farmers to take loans, by reducing the cost of farming. One such solution, now officially adopted by Andhra Pradesh, Telangana, Karnataka, and others if Natural Farming using no chemicals or expensive inputs, but only natural products which farmers can produce themselves, like cow dung, cow urine, neem leaves, pongamia, etc. This has been called Zero Budget Natural Farming by SUbhas Palekar, one of the experts who uses this method, and teaches farmers all over India. I myself use these methods in my farm. more
Sep 08
It's the duty of the RBI to monitor this unscrupulous activity of the corporate sector if they want the farmers to prosper in India. more
Sep 07
This clearly shows that any Govt is same in misusing funds for their self goals. It is the fate of Indian public. Our protests go like dust in the air. more
Sep 07
