Agri bank initiates legal action against loan defaulter farmers

Ruchika M Khanna

Tribune News Service

Chandigarh, July 19

Punjab Agriculture Development Bank (PADB), by its own admission, is initiating legal action against those farmers who have defaulted on the repayment of their loans.

The bank has sent the cases of defaulting farmers for arbitration. The lists of defaulting farmers and properties they have mortgaged to get the term loans are ready. In certain instances, cases under Section 138 (cheque bounce) of the Negotiable Instruments Act have been filed against defaulters.

As a financial institution, the bank, having advances of Rs 2,682.58 crore (besides due interest of Rs 1,052.44 crore), has little option but to effect recovery of its loans, especially when the gross non-performing assets (NPA) of the bank are almost 44 per cent. However, the bank insists it is using “non-coercive” methods to make recoveries and these are being effected only through above-listed “persuasive” methods.

Talking to The Tribune here on Thursday, Managing Director of the bank HS Sidhu said the bank, as a standard operating procedure, sent all cases of wilful defaulters for arbitration. “Once the arbitration is over and we take the award from arbitrators, banks make lists of ‘sale cases’. This practice has been going on for several years… but the bank has not sold any such mortgaged assets of farmers at least in the past decade,” he said.

Sidhu added that notices to the defaulting farmers, saying that their mortgaged land would be auctioned, were sent, but the land had not been auctioned since March 2017. “These are just tactics to effect higher recovery. After the Crop Loan Waiver Scheme was announced, the farmers stopped paying their term loans. Against due recovery of Rs 1,400 crore, our recovery was just Rs 157 crore. Since this affects future refinancing from NABARD, we have initiated the drive to recover non-farm loans from big wilful defaulters,” he said.