Told to pay dues before seeking fresh loans, farmers threaten stir

Farmers in Vellore and Ranipet districts have threatened to stage a State-wide agitation over this.

Earlier, farmers could repay the interest and then extend the same loan for another crop – depending on availability of funds. However, following RBI and National Bank for Agriculture and Rural Development (NABARD) guidelines, the PACBs have asked farmers to close existing loans before seeking new loan directly from the district central cooperative banks which would remit the amount directly into their SB accounts. This led to PACB secretaries agitating that the primary banks would become dysfunctional if all rural banking services were vested with the district central banks.

TN Farmers Association Vellore president K Raja and Tamilaga Vivasayigal Sangam youth wing president K Subash warned that farmers affected by this move would be forced to let their land lie fallow, migrate or switch to other jobs, resulting in drop in coverage area and also crop production.

However, sources clarified that the RBI and NABARD intervened mainly to stop illegal practices that are allegedly rampant in some rural banking institutions. Citing a case, the person said, “The Gudiyattam town bank has initiated a probe over the bank running up overdraft of more than Rs 10 crore from 2010 when the same for the entire district is only Rs 16 crore.”

The initial inquiry by the cooperative circle deputy registrar brought to light the allegedly corrupt practices indulged in by four former bank managers. “They would use the records of self-help groups who had repaid their loans and then change the group name, show somebody else as SHG leader and then use the person’s Aadhaar card details that they have to avail ‘fictitious’ loans below Rs 3 lakh (the district central cooperative banks clearance was necessary for amounts above Rs 3 lakh),” he explained.

The issue came to light when SHGs that received notices asking them to repay outstanding loans replied that they had cleared their dues months earlier. “We are in the process of asking the culprits to either repay the money and face departmental disciplinary action or else have their properties seized,” sources said.

Top officials from Vellore Central Cooperative Bank (VCCB) said, “We have asked the affected persons to file a complaint with the district crime branch to protect themselves, as the matter is likely to be handled by the commercial crime intelligence wing.”