Budget Bonanza of Rs 8 lakh-cr to NBFCs at Farmers' Cost-IANS
Mumbai, Feb 6 2020
https://www.outlookindia.com/newsscroll/budget-bonanza-of-rs-8-lakhcr-to-nbfcs-at-farmers-cost/1727988
The announcement by Union Finance Minister Nirmala Sitharaman to rope in Non-Banking Finance Companies (NBFCs) for disbursing agriculture loans, "may be a bonanza of Rs.8 lakh-crore, but it is at the cost of millions of poor farmers in the country," warn experts.
In her marathon Union Budget 2020-2021 speech, Sitharaman unveiled a 16-point action plan to boost the agriculture sector with a credit target of Rs 15 lakh crore till March 2021, up from Rs 12 lakh crore set for the current year (March 2020).
"NBFCs and cooperatives are active in the agriculture sector credit space. The NABARD re-finance scheme will be further expanded," Sitharaman said, sounding alarm bells among agriculture authorities and activists.
"This is a sheer scam...It can further aggravate the agrarian crisis in India as the role of NBFCs and cooperatives is more exploitative than the private money-lenders ('sahukars'). Worse, it will be done with a protective umbrella from RBI and NABARD," Vasantrao Naik Sheti Swavalamban Mission (VNSSM) President Kishore Tiwari told IANS.
He said that of last year's Rs 12 lakh crore, barely an average of 45 per cent target was achieved through the public sector, cooperative and regional rural banks.
"This implies that for 2020-2021, of the Rs.15 lakh-crore target, a staggering Rs 8 lakh crore may be up for grabs for the NBFCs to play around with high interest, subsidies with no regulatory controls. It appears the BJP wants to throw the farmers to the wolves," he alleged.
All India Kisan Sabha General Secretary Hannan Mollah, ex-8-time MP, said the "16-point Action Plan is a 16-point fraud" and on Feb. 13, the All India Kisan Sangharsh Coordination Committee with 250 organisations, will hold nationwide protests against the "anti-farmer Budget of the BJP".
"Even of the loans that are said to be disbursed, nearly two-thirds go only to the agro-industries, depriving the truly needy farmers. With government allowing NBFCs to enter this sector, farmers may resort to en-masse suicides," Mollah told IANS.
Swabhimani Shetkari Sanghatana (SSS) President Raju Shetti, ex-MP, contends that the proposal is "ill-advised" and will have a disastrous impact on the already distressed rural economy.
"PSU banks throw away farmers, cooperative sector is not effective, and now the government wants to include NBFCs in the scheme...they will take the subsidies from the government and cheat the poor farmers," Shetti said.
Tiwari, who is Advisor to Maharashtra Chief Minister Uddhav Thackeray, is equally worried about the high interest rates that may be charged by the NBFCs, estimated to be around 11,000 in India.
"A majority of the NBFCs are themselves in deep crises, many are scam-ridden, thousands of big and small NBFCs have cheated the people of lakhs of crores of rupees, and even conservative estimates of their frauds are not known as they are virtually out of most regulatory controls. This new proposal must be scrapped forthwith," fumed Tiwari.
Shetti added that most NBFCs are controlled by unscrupulous politicians or businessmen, offer exploitative microfinance schemes and disburse loans without credential checks, hire goons for targets or recoveries, after defaults go for Arbitration Proceedings, manage ex-parte awards and start execution proceedings in district courts based on that.
Maharashtra Trade Unions Joint Action Committee (TUJAC) Convenor Vishwas Utagi said NBFCs are known to charge exorbitant interest rates ranging from 24 to 36 per cent, harass and fleece customers, and now even the farmers will be at the mercy of NBFCs.
"The role of the village 'sahukars' will effectively get 'institutionalized' through such NBFCs. Is the Bharatiya Janata Party trying to kill its own PSU banks, cooperative and rural banks? Nirmala Sitharaman must immediately rescind this blatantly 'anti-farmer' move," Ugati said.
The VNSSM head said that instead of considering proposals like giving a Rs 3 lakh-crore package for outright farm loan waiver, and setting up a National Farmers Rights Commission, Sitharaman "seems more interested in bailing out the NBFCs at the cost of the farmers".
Tiwari said Sitharaman has relaxed the eligibility of NBFCs for debt-recovery under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) 2002 from Rs 500 crore to Rs 100 crore for asset size and from Rs 1 crore to Rs 50 lakh for loan size, which would "wreak further havoc on the country's financial and agriculture sectors".
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