Three days after the state government issued a veiled threat of coercive measures to force banks to extend moratorium on farmers' loans, the banks have defiantly hit back.
The State-Level Bankers' Forum, in a carefully worded public notice, has categorically stated that moratorium on farmers' loans will be off from July 31. The moratorium will not be extended till December 31, as insisted upon by the state government.
This sets the state government on a collision course with the banks. Earlier, when Chief Minister Pianrayi Vijayan had called the SLBC for discussions on June 25, it was expected that the banks would toe the government line. Now, two days before the meet, the banks have demonstrated they are bracing for a showdown.
The SLBC has apparently taken a legal position. “Since the Reserve Bank has not given its approval, it will not be possible for banks to offer any benefits, including moratorium, beyond what was decided at the SLBC meeting held on August 20, 2018,” the notice, which had appeared in major dailies, said. The SLBC's August decision was to provide moratorium on the short-term loans of farmers till July 31, 2019. It was on June 20 that the RBI had formally conveyed its objection to an extension.
Agriculture Minister V S Sunilkumar, however, has a different reading of the latest RBI directive. The RBI has not exactly said that they are against the extension of moratorium, according to him. “What the RBI has instead said is, a decision on extending moratorium is something that can be taken at the SLBC level. The onus is on the SLBC. That is why we are holding talks with them on June 25,” the agriculture minister said.
“The only extension the RBI has rejected is the deadline for the rescheduling and restructuring of banks,” the minister said. The government wants loans taken by a farmer even after December 31, 2018, to be restructured, or reworked in such a way that it is less of a burden for the farmer. The RBI has put its foot down on the restructuring of loans taken after December 31, 2018.
The RBI's intervention has stung the government, even if it still feels that the apex bank will not stand in the way of moratorium. On June 20, right after the RBI gave its thumbs down to the extension of the moratorium, Agriculture Minister V S Sunilkumar had said that the government would do whatever was necessary to ensure that farmers enjoyed moratorium till December 31 this year on all kinds of loans they had taken.
Sunilkumar had also hinted at aggressive steps if banks were unwilling to fall in line. “If they disregard our request and arbitrarily go ahead with attachment of farmers' properties under the SARFAESI Act, the government will not cooperate with them,” the minister said. Under the Act, if the occupant is unwilling to vacate, the banks will have to get an eviction order from the top revenue officials in the district. And this order can be implemented only with the help of the police. Sunilkumar was virtually saying that revenue and police officials will not cooperate with the eviction proceedings under the SARFAESI Act.
The decision to extend the moratorium on loan-recovery proceedings on agricultural loans to December 31 was taken at a special cabinet meeting held on March 5 this year. In fact, the government had extended the deadline from July 31 to first October 31 and then, on March 5, to December 31. The SLBC was also kept in the loop. By then, 13 farmers had committed suicide in Idukki and Wayanad in the aftermath of the floods. Given the crisis in the agriculture sector, the SLBC had then seemed sympathetic to the government's request.
The banks, however, had to get the approval of the RBI before putting the moratorium in place. The RBI's latest diktat came when the banks approached it seeking sanction for extending the moratorium. The government's argument was that the banks should use the discretion the RBI had given them in its latest directive. But the SLBC's public notice is silent on such a discretion.
If the banks are trying to create the impression that they are playing by the book, the government plans to draw the attention of banks to their unacceptable anti-farmer practices. “Most of the loans given to the primary sector are agricultural gold loans. But these are not availed of by farmers. It is not as if the banks are not aware of this,” the agriculture minister said. “We will insist that such loans should be given only to bonafide farmers, only to those who submit a certificate from the agriculture officer,” he said.
The government is also expected to pin the banks on various other farmer-related issues, too, during the June 25 meeting with the SLBC representatives. “Under article 31 (i) of the SARFAESI Act, agricultural lands are exempted from the extraordinary provisions of the Act. But banks in Kerala consider only paddy fields as agricultural lands, treating all other farmers - spices, rubber, fruit and vegetable - just like ordinary people. This has to change,” the minister said.
He said the banks were blindly attaching farmers' properties even after the floods that the government had to constitute sub-committees in Idukki and Wayanad, districts most affected in the floods, and ask the banks to route their SARFAESI claims through these sub-committees.
Finance Minister T M Thomas Isaac, too, have come out against the banks. “The SLBC had no qualms about writing off the bad debts of corporates. Its refusal to extend moratorium for farmers' loans will be taken up seriously,” the minister said.