Lok Sabha Question No. 2986 (UNSTARRED), answered on 2018-12-28
Subject: Wilful Defaulting Farmers
Ministry: FINANCE
Asked by: ASADUDDIN OWAISI

## Government of India Ministry of Finance Department of Financial Services

## LOK SABHA

Unstarred Question No. 2986

To be answered on Friday, December 28, 2018/Pausha 7, 1940 (Saka)

## Wilful Defaulting Farmers

## 2986. SHRI ASADUDDIN OWAISI:

Will the Minister of FINANCE be pleased to state:

- (a) whether due to the wide spread agitation of farmers in different States the Union Government has come out with cheaper loans to farmers from Rs. 15000 crore to Rs. 20,339 crore and if so, the details thereof;
- (b) whether the banks have opposed this move of cheaper loans to farmers due to their increasing NonPerforming Assets (NPAs);
- (c) if so, the main points put forward by the banks in this regard;
- (d) whether many farmers in the country are wilful defaulters who are in a position to repay the loans and if so, the details thereof; and
- (e) whether the Government has any scheme to identify such farmers to save the banks from increasing NPAs and to pass the benefit to the needy farmers and if so, the details thereof?

## Answer

## The Minister of State in the Ministry of Finance (Shri Shiv Pratap Shukla)

- (a) to (c) : With a view to ensure availability of agriculture credit at a reduced interest rate of 7% p.a. to the farmers, the Government of India in the Department of Agriculture Cooperation and Farmers' Welfare (DAC&FW) implements an interest subvention scheme for short term crop loans up to Rs. 3.00 lakh. The scheme provides interest subvention of 2% per annum to Banks on use of their own resources.  Besides, additional 3% incentive is given to the farmers for prompt repayment of the loan, thereby reducing the effective  rate  of  interest  to  4%. During  the  financial  year  2017-18,  a  sum  of  Rs.  15000  crore  was allocated under the said scheme and Rs. 13,045.72 crore was released to the implementing agencies of the scheme.
- (d) & (e): Data on Gross Non Performing Assets (GNPAs) for Agriculture & Allied Activities, in respect of Scheduled Commercial Banks (SCBs) for the last three years, as reported by RBI, is as under :

| Agriculture and Allied Activities - GNPAs   | Agriculture and Allied Activities - GNPAs   | (in Rs. Crore)   |
|---------------------------------------------|---------------------------------------------|------------------|
| March 31, 2016                              | March 31, 2017                              | March 31, 2018   |
| 51,964                                      | 62,321                                      | 85,482           |

As per RBI Master Circular dated July 01, 2015, a 'default', to be categorised as 'wilful default', must be intentional, deliberate and calculated. A "wilful default' would be deemed to have occurred if it is noted that default in meeting payment/repayment obligations is accompanied by any of the events mentioned in  the  said  Master  Circular  which,  inter  alia,  includes  diversion  and  siphoning  of  the  borrowed  funds, disposal  or  removal  of  the  movable  fixed  assets  or  immovable  property  given  as  security  without  the knowledge of the lender/bank, etc. The said Master Circular requires Banks and Financial Institutions to put  in  place  a  transparent  mechanism  for  identification  and  penal  action  to  be  taken  against  wilful defaulters as per the relevant provisions therein.

As  per  the  guidelines  action  for  willful  defaulters  includes;  (i)  restricting  additional  facilities  to  such defaulters from banks and financial institutions, (ii) barring of such borrowers from institutional finance, (iii)  criminal  action,  (iv)  removal  of  directors  of  such  companies  from  boards  and  (v)  change  in management. Further, banks and financial institutions are required to report suit-filed/non-suit filed wilful defaulter accounts of Rs 25 lakhs and above to the four Credit Information Companies (CICs) at least on a  monthly  basis.  RBI  vide  circular  dated  September  29,  2016,  has  provided  a  mechanism  to  publish photographs  of  wilful  defaulters  in  newspapers  as  per  board  approved  policy  of  respective  financial institution.