Chandigarh: Debt Swap Scheme, designed to free farmers from the clutches of money lenders, has failed to pick up in Punjab and Haryana, with banks failing to extend targeted amount of advances to debt-ridden farmers in these agrarian states.

Debt Swap Scheme has failed to achieve desired results despite the fact that the amount of loan ceiling under this scheme has been doubled from Rs 50,000 to Rs 1 lakh by the banks.

The poor performance of debt swap scheme in Punjab and Haryana could be gauged from the fact that just 17.49 percent and 18 percent of targeted debt swap have been achieved respectively till March 2012, as per latest data provided by State Level Bankers’ Committee (SLBC) on Tuesday.

As per the Debt Swap Scheme, 3 percent of total disbursements for agriculture should be earmarked for extending loans for swapping debt.

Banks in Punjab extended loans worth Rs 215.82 crore till March, 2012 under this scheme against the target of Rs 1,234.21 crore. Similarly in Haryana, loan amounting to Rs 187.47 crore were extended against target of Rs 1,014.88 crore.

Debt Swap Scheme has a mandate to swap farmers’ debt taken from moneylenders with fresh banks’ advances in order to bring them out of their clutches.

According to bankers, moneylenders or commission agents charge very high rate of interest up to 30 percent per annum from farmers against loans and farmers continue to repay debt throughout their lives.

Finding “unsatisfactory” performance of banks, SLBC Convener Usha Ananthasubramanian, who is also ED of PNB, today pulled up several nationalised banks as well as private banks for not putting in their efforts to make this scheme successful.

Banks like SBI, Bank of Baroda, State Bank of Patiala, Canara Bank, ICICI Bank, Kotak Mahindra, Karnataka bank among others not extended a single penny from April 1, 2011 till March, 2012 under Debt Swap scheme in Haryana. The performance of private banks in Punjab has also been quite dismal with regard to this scheme.

To turn this scheme into a success, SLBC in 2010 gave its nod to double the ceiling of loan under Debt Swap Scheme from Rs 50,000 to Rs 1,00,000 in Punjab and Haryana.

Both Punjab and Haryana government have vociferously been demanding enhancement in debt swap scheme limit in order to bring farmers out of the clutches of moneylenders.

Money lending is a flourishing business in Punjab and Haryana as farmers prefer taking loan from informal sources to banks because of ease in getting money.

“Farmers can get loan at any time from money lender because he is easily accessible. Moreover, farmer can use the money anywhere as moneylender will not question him about purpose of raising loan,” a bank official said.

Another reason in slow progress in debt swap scheme has been reluctance shown by farmers in revealing their financial liabilities with money lenders, bankers said.


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