Maharashtra Farm Loan Waiver: IT enables targeted payments

Data is being collated from banks regarding the defaulting farm loan accounts.  A digital interface is being evolved at the government level to integrate and share the data coming from both sources in a bid to ensure that only those entitled to the benefit  derive it

Over 8.13 lakh farmers in the state have till now applied for benefits under the Maharashtra government’s Rs 34,022-crore loan waiver scheme.  With it now being almost a month since the state first invited farmers to enroll for the benefit, government officials said the state had now decided to launch an outreach programme to speed up the enrollment process.

While the government announced the loan waiver on June 24, it began inviting applications from eligible farmers from July 17. Under the loan waiver scheme, the government has proposed to entirely take over the outstanding farm loans of 36.1 lakh farmers, who have run into loan arrears up to Rs 1.5 lakh since 2009.

Until Monday, however, nearly 10.05 lakh farmers had registered to avail the benefit.  Of these, 8.13 lakh formally applied for the waiver, said sources.

Data is being collated from banks regarding the defaulting farm loan accounts.  A digital interface is being evolved at the government level to integrate and share the data coming from both sources in a bid to ensure that only those entitled to the benefit  derive it.

Several instances of dubious beneficiaries had cropped up when the last farm loan waiver was rolled out in 2009. To avoid a repeat of this, the state government has decided to seed a beneficiary farmer’s Aadhaar details with his outstanding loan account/s.

“The banks have informed that such data was already seeded in 75 per cent cases. We are hoping this would weed out the instances of multiple or bogus claimants,” said a senior official.  The government has plans to complete the scrutiny process in the coming month.

After making budgetary provisions of Rs 20,000 crore for payment to banks for taking over the outstanding loan accounts, it is targeting settling of at least 28 lakh such accounts by the end of September, restoring their line of credit.

Though the Reserve Bank of India (RBI) has refused to ease the provisioning norms for the grant of fresh crop loans to farm loan accounts that have turned bad, it has clarified that granting such loans was not barred and left it to the respective banks to take a call on this.

According to official records, the outstanding farm loans totalling Rs 12,629 crore in  the state have turned bad over the years. Another Rs 10,001 crore bad loans have been restructured. Meanwhile, the state government has plans to write to the banking sector regulator over a couple of riders it had imposed while permitting banks to advance interim short term loans of Rs 10,000 to farmers whose accounts were overdue or had turned bad.

Agreeing to consider the Rs 10,000 crore loan to such accounts classified as ‘standard’, the RBI had put a condition that the government must first identify and advise all banks concerned regarding the farmers to be given these loans while informing the RBI regarding the aggregate of such loans.

But the government has reasoned that the benefit was demand-driven, and that it had already adequately guaranteed the loanee banks.  The government is willing to issue an undertaking to the RBI that the aggregate amount of the loans and the interest payable on it would be adjusted from it own resources on or before December 31, 2017.