The State Bank of India (SBI) has kicked off the farm debt relief scheme, which will benefit an estimated 50 lakh farmers across the country.
SBI chairman O P Bhatt initiated the waiver scheme by distributing fresh loan eligibility letters to farmers after waiving their prior debts under the scheme, during a visit to a rural branch of SBI at Jamli in Madhya Pradesh. He told farmers that they would not have to apply for a debt waiver, but the bank will instead do it for them, and issue a certificate to that effect. Bhatt asked bank personnel to implement the scheme within the deadline, and extend fresh loans for the ensuing kharif cultivation season.
According to SBI, it is the first bank to have implemented the scheme. Around Rs43,000 crore is estimated as SBI's exposure to farm loans. The bank is expected to waive around Rs1,000 - Rs2,000 crore under the scheme, Bhatt said.
The farm loan waiver scheme was announced by finance minister P Chidambaram during his budget speech this year, with the initial waiver for farm debts at Rs60,000 crore that was later enlarged to Rs71,680 crore of total debts. Commercial banks such as SBI have been asked to implement the Rs71,680-crore waiver by the end of June 2008. Small and marginal farmers are to get full debt waiver, while 60-65 per cent of large farmers will also benefit from a full debt waiver.
Allahabad Bank chairman and managing director AC Mahajan is scheduled to initiate the waiver scheme on 3 June in Lucknow, on an estimated exposure of Rs1,000 crore of overdue farm loans. United Bank of India (UBI) chairman PK Gupta has already initiated the waiver scheme at Baharampur in West Bengal.
Other public sector banks are gearing themselves to implement the loan waiver by 30 June 30, the date by which the finance minister wants them to start implementing the mammoth relief programme.
Significantly, the finance ministry has urged banks to make the process flawless so that the government can derive maximum mileage in the run-up to Lok Sabha elections. So much so, all frontline bankers are leading from the front in implementing the scheme.
United Bank of India (UBI) chairman PK Gupta has initiated the process at Baharampur in West Bengal.
The finance ministry has said that it would hold every lending institution responsible for accuracy of its lists of farmers eligible for relief. Farm loans disbursed before 31 March 2007, that have been put on the overdue list after 31 December, and remain unpaid till 29 February 2008, would be entitled for both the loan waiver and one-time-settlement schemes.
Banks will be required to issue certificates to farmers whose loans will be waived to enable them to avail of fresh bank loans.
The finance ministry has asked banks to appoint grievance redressal officers for each state, with the authority to receive representations from aggrieved farmers and pass appropriate orders. The finance ministry guidelines have also stipulated that the order of the officer would be final.