Banks can’t use coercive methods to recover agricultural loans: HD Kumaraswamy

HD ​​Kumaraswamy
HD Kumaraswamy warned banks that his government won’t ignore the collection of post-dated cheques (PDCs) from farmers for agricultural loans.

BENGALURU: Karnataka chief minister HD Kumaraswamy issued a warning to banks about using coercive methods to recover agricultural loans amid statewide protests against Axis Bank, which has filed cheque-bounce cases against farmers.

“What Axis Bank has tried to do is to convert civil liability on the part of farmers into criminal liability and intimidate farmers–that is not acceptable,” the chief minister told ET. “The bank has issued many tractor loans, which come under the agriculture lending portfolio and collected post-dated cheques.”

The chief minister said he wasn’t against lawful recovery proceedings but said the lender had sought to bully farmers. A court in Kolkata, where the cases were filed, has issued arrest warrants in 135 such instances.

The lender is working with the state government to sort things out amicably, said Sadashiva Mallya, regional branch banking head, south, at Axis Bank. The bank won’t withdraw the cases but will take steps to transfer them to Karnataka from Kolkata, he said.

The Belgaum farmers had taken loans five years ago against blank cheques. These were presented when the farmers defaulted, leading to the cheques bouncing for want of funds.

The bank subsequently filed the cheque bounce cases in a Kolkata court, which issued arrest warrants against the farmers. “When the farmers are in Belgaum, where is the need to file cases in a Kolkata court?” said the chief minister. “This is because the Axis Bank’s legal team sits in Kolkata, so they have filed the case there.”

Kumaraswamy warned banks that his government won’t ignore the collection of post-dated cheques (PDCs) from farmers for agricultural loans. The government, he told ET, will deal with such actions and write to the Reserve Bank of India (RBI) as these are unlawful and amount to violation of guidelines.

He called for a national debate on the methods adopted by private banks to recover dues from farmers in the light of the latest developments. “I appeal to farmers not to panic and leave their villages,” the chief minister said. “I have told the Belgaum deputy commissioner and the SP (superintendent of police) not to arrest any farmer. The deputy commissioner is holding a meeting on November 7 with bank officials and farmers.”

Farmers’ groups led by the Karnataka Rajya Raitha Sangha (KRRS) held demonstrations outside Axis Bank branches in the state, forcing closures in Haveri district.

[“source=forbes]