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Bank loan and the down trodden in Uttar Pradesh

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After independence on the realisation that the main impediment in boosting Agricultural Production in the country was unavailability of timely finace for the poor agricultural population and the tight grip on them of the traditional money lender, major banks were nationalized and were systematically brought into play for giving loans to this sector. Many government supported schemes for providing margin money or part of the interest burden in the form of subsidies were also launched.

It was felt at that time, that banks were hesitant in risking their money on Agriculture and Weaker Sectors of economy. To strengthen their confidence different meaures were taken. One of these measures was formulation of special acts for recovery of such money by different state governments.

The nationalization of banks, no doubt has resulted in a support for these people and definitely has a brought about a relative improvement in the scene, but on the other hand has also brought further and new miseries in its wake.

1. The well known and oft talked about of these miseries is eating away of the share or even full of the government subsidies bu corrupt officials, insufficient funding of the project, untimely and delayed release of the funds etc.

2. Another area on which probably nothing has been written so far, and which has not at all been talked about is presence of harsh and coercive recovery laws  which are biased and discriminate grossly against bank borrowers from the agricultural and weaker sectors. They are also misused and abused, by bankers and state recovery officials through the instrument of Recovery Certificates under (a) UP Public Money (Recovery of Dues Act) and (b) UP Agricultural Credit Act.

The second area is specially the one where the author of these lines will focus his attention in the light of his very perosnal memories as an agricultural officer in one of the biggest nationalized banks posted at differnet levels of control and having interacted directly with the poor borrowers, with the recovey agency that is recovery amins and tehsildars, memories of discussions held at different official meetings right from the BLBC (Block Level Banker's Committee) to SLBC (State Level Bankers Committee) and those gathered from his stint as a functional manager at the Zonal Office dealing with Non Performing Assets (ie., Bad Loans).

Recovery Certificate: A recovery certificate or RC as it is commonly known, is a letter from the bank branch to the district magistrate stating that such and such person availed a loan from the said branch, which has gone bad and irricoverable. Upon receipt of this letter (without any independent enquiry into the alegation, and the circumstances thereto), the district magistrate orders the concerned tehsildar to recover the money as dues of Land Revenue alongwith a 10% recovery charge and remit it to the bank (The recovery charge goes to treasury). In case of non payment the recovery amin is empovered to arrest the person and the tehsildar can imprison the person for a certain term.

Who is Covered Under these Acts?

Not the big or medium borrowers, only the following categories:

Under Agriculture Credit Act: All loans and advances given by banks for the purpose of Direct Agriculture and Allied activities like Dairy, Pioutry, Piggery etc..

Under UP Public Money (Recovery of dues) Act: Any government supported finacial help scheme to the weaker sector of society which has been covered under the scheme through a Government Notification examples are: IRDP, Special Component Plan (for the SC/ST beneficiaries), Margin Money Loan Scheme for Minority Communities etc.

At this stage I do not have statistics to support my assertion but I am sure if a caste and community wise breakup of the total RCs filed during say last ten years is collected (and of course randomly cross checked on surprise check basis) it can be proved beyond doubt that the major chunk of the people affected consists of SC/ST, Minorities, and Women.

Who is the authority to sign the RC? In theory the branch manager. In practice the loan clerk. There are instances when only the names of a few alleged defaulters are given to the recovery amin and he starts recovery, and more than that harrasment of the alleged defaulters even without waiting for an order from the district magistrate.

Has the alleged defaulter, a remedy if he has been wrongly framed/harrased? In theory yes he can go to the court. In practice only those go to the court who are moneyed and influential people aware of their right and who have access to and can aford a lawyer to challange the RC. Do you expect that a widow whose last peice of land has been snatched against her alleged dues to a bank by the district authority, and who has ultimately again borrowed from the village money lender to eat her bread will go to the court for an appeal? In fact even the principle of natural justice (According to which every accused human being has a right to be heard before being punished for any alleged default or crime) is thrown to winds.

Is there any mechanism to verify whether the filed RC was correct? No, in practice there is none! No RC is ever verified by the district authorities to check whether it was correct or not at any level! It will not be out of place to note and add that in most of the cases a loan goes bad because of the callous approach of the banker - insufficient funding, untimely release of funds, apathy towards providing counsumption need support loan (Though there is provision for the same in the RBI directives and most of the banks schemes) in time of family crisis etc (Not to speak of malacious eating away of subsidy funds).

Is the assumption that banks have a large chunk of their funds locked up in bad credit to Agriculture and Weaker Sector Credit True? In my openion not at all. It is just the other way round it is very large enterprises and buisness houses which play with this money. This can be verified by collecting the necessary information from the banks.

I assume that if properly collected and analyzed it will make it amply clear that bankers do not need any specific protection for their exposure of funds to Agriculture and Weaker sector. They should be better advised to concentrate not letting their big accounts misutilize the funds.

It is the responsibility of every enlightened citizen, who believes n rule of law, to strive for formation of a body which randomly checks and verifies filed RCs and in case of any instance found fit for a legal challenge, to help and assist the person to fight his case to the end...even if that means going to the Apex Court and to see that all guilty of his misery are duly punished under proper legal framework.

 
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