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States can penalise usurious moneylenders to protect farmers: FM

Written by: Staff

New Delhi, Mar 3 (UNI) Finance Minister P Chidambaram today said the state governments should penalise usurious moneylenders or financiers under the Anti-Usury Acts for charging astronomical interest of 50-60 per cent from farmers, pushing them into debt-trap and ultimately forcing some of them to commit suicide.

Responding to several members' queries in the Lok Sabha, the Finance Minister wondered why the states were not taking punitive action against unscrupulous moneylenders and ''sahukars'' under the Usurious Loan Probibition Acts available on their states.

Such acts prohibit the moneylenders to charge abnormal interest from farmers, he added admitting that only 27 per cent farming households had availed the institutional credit from scheduled banks or cooperative soceities and rest of them meet their credit requirements from private moneylenders only.

In reply to a question by BJP member from Punjab Abhinas Khanna on what steps the Centre had taken to prevent farmers from the clucthes of local moneylenders, Mr Chidambaram said it would be a slow process to cover all farmers under cooperative and banking network in rural areas.

With the increased credit flow to the farm sector every year by 40-50 per cent, for three years the UPA government had been weaning away 50 to 60 lakh more households from the grip of the private moneylenders whose operation now covered around 22 per cent rural households, he added.

In the Budget now, provision for rural credit had been enhanced to 1,75,000 crore which was mere Rs 62,827 crores in 2001-02.

The Finance Minister made it clear that only short-term crop loans be given to the farmers at 7 per cent interest from cooperative banks and scheduled banks as NABARD would refinance them with capital on soft interest.

Responding to assertion of BJP member Kansi Ram Rana that the banks never met 18 per cent limit for lending to the agricultural priority sector, Mr Chidambaram said the banks had to meet with the condition. And those banks which failed on this count, had to contribute the remaining portion of the priority sector loan to RBI corpus, which had been raised to Rs 10,000 crore from Rs 8000 crore this year, and also added to this a separate NABARD-managed sum of Rs 4000 crore for rural roads.

The Minister, however, did not agree with some members' contention that the foriegn banks operating in the country should also lend to the farming sector as they were doing in the case of small scale industry.

He said such eventuality would entitle the foreign banks to open their branches in rural areas too.

Under the RBI guidelines and policy programme of the government, no foreign bank is being allowed to open its branch in villages and said ''We do not want to change this policy as foreign banks reaching out to villages would not have postive impact".


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