Bring OTS plan for dead loanees’ kin, small farmers: House panel to bank

Mohan Singh (name changed) is a big landlord in Basti Ram Lal village of Ferozepur. He owns 25 acres of land, but around 20 acres of his cultivated land gets submerged in water when the Satluj swells during the monsoon. He has to suffer economically as the crop gets damaged. As a result, he is unable to repay the loan of Rs 17 lakh that was taken by his father, Brahm Singh (name changed), in 2004.

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After his father’s death, he “inherited” that debt liability, with the total dues mounting to around Rs 50 lakh. “Since my annual income comes from only around five acres, I am in no position to clear the entire debt. If the bank gives me some way to settle my debt, I may be able to repay only the principal amount,” he said.

He is not the only farmer stuck with an unpaid debt taken by his family elders, who have now passed away. Among the 55,574 defaulters of Punjab State Cooperative Development Bank, who owe the bank around Rs 3,006 crore, are the families of 8,000 farmers who have died without repaying the loan.

The Punjab Vidhan Sabha Committee on Cooperation is taking stock of the financial mess created in the state cooperative banks. A number of politically well-connected and big landlords have wilfully defaulted on repayment of their loans worth Rs 366.96 crore. A key question before the panel is: Whether the bank should adopt a purely business approach in recovering the loan amount from the families of 8,000 deceased farmers, or launch a one-time settlement scheme for them.

At a meeting of the committee, headed by Sardulgatrh AAP MLA Gurpreet Singh Banawali, held last week, members told the bank officials to write to the state government, seeking permission to bring an OTS plan for small and marginal farmers and for the families of those loanees who were now dead.

Though the officials were reportedly reluctant, the committee has prevailed upon them to write to the government for bringing an OTS scheme. The committee is learnt to have reasoned that by bringing such a plan, the bank will at least be able to recover a major part of its principal amount (Rs 1,444.45 crore) that has become a non-performing asset (NPA).

Estimated 8,000 loanees, who are now dead, were given loans by 89 branches of the bank across the state. The loan advanced to these loanees is around Rs 150 crore. The interest and penal interest charged on the amount in default is around Rs 100 crore.

Around 16 years ago, Amar Singh and Beant Singh (names changed), two brothers from Kapial village in Bhawanigarh, had also taken a loan of Rs 20 lakh. The brothers are now dead, but the loan liability stands in the names of their kin, including one who has major health issues.

“No one wants to die leaving behind a debt, but when the interest surpasses the principal amount, how can we repay that,” said one of the family members.

The Vidhan Sabha panel has also suggested that to recover the Rs 366 crore dues from big landlords and politically connected wilful defaulters, they can be asked to repay the loan at a lower interest rate of 9.5 per cent only.