WILL THIS BE NEW AVENUES FOR VALUERS AS FINANCIAL INSTITUTIONS MAY NEED AUDITS OF FARM LOANS BY RBI
Banks in Punjab have approached the RBI to check reckless lending to the agriculture sector and sought a special audit. According to bankers, some of the banks are flouting norms and sanctioning crop loans against the value of land instead of yield, thereby affecting the servicing of loans.
“Few of the banks are sanctioning agriculture loans more than the scale of finance prescribed by National Bank for Agriculture and Rural Development (NABARD) and the state government, resulting in farmers being over financed as compared to the land they are cultivating. Further, a large number of farmers are getting multiple loans from different banks. Due to over financing, farmers are not able to service their loans and are under distress,” said PNB General manager PK Anand and convener, State Level Banker’s committee.
“We have suggested that the banks should be asked to strictly finance within the scale of finance and if feasible, RBI may conduct a special audit. We have also requested the state government to digitize 100% revenue records to avoid over-lending,” he added.
The total institutional debt of farmers in the state was Rs. 77,229 Crore as on December 2018 in case of agricultural loans.
According to the bankers, the debt of the farmers has grown manifold in the state in the past five years as compared to the income, resulting in indebtedness.
According to the request of PNB, it was informed that a committee constituted by the RBI was studying the loan disbursement pattern to the farmers.
“The uneven pattern of loan disbursement is a cause of concern for the banks. For example, one bank gives Rs. 60,000 crop loan for a particular acre, while the other bank lends Rs. 1.5 Lakh for the same area,” a banker said.
Official’s feels most of the unmanageable debt was given for non-agricultural purposes, largely to address social needs of the farming community.
CURRENT SCENERIO
Outstanding Loans
Rs. 77,229 Cr (as on Dec 18)
NPAs (as on Dec 18)
Rs. 7,949 Crore
NPAs (as on Dec 19)
Rs. 6,611 Crore
The average debt of farmer
Rs. 5.75 Lakh
The over-lending by banks has affected the recovery of loans. In the past one year, the NPAs of the banks under farm loans have increased by 2%. In absolute terms, the NPAs have increased by Rs. 1,335 Crore during the last year.
