Farm loan waiver fraud hits AP

By Express News Service – HYDERABAD

Published: 06th March 2013 08:55 AM

Last Updated: 06th March 2013 08:55 AM

Andhra Pradesh has its share of the “irregularities” committed in the implementation of the Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS), 2008.

The Comptroller and Auditor General, in his report submitted to Parliament on Tuesday on ADWDRS, found that, among other things, one private Scheduled Commercial Bank (name not mentioned) received reimbursement for loans which were extended to Micro Finance Institutions (MFIs) in five states, including Andhra Pradesh. The amount reimbursed was Rs 164.6 crore (for all the five states).

In AP, the total number of farmers who benefited from the scheme was 77,55,227 and the total loan waiver and relief given to them was Rs 11,353.75 crore. All over India, the total amount waived was Rs 52,000 crore and the number of beneficiaries were 3.45 crore.

This was in violation of guidelines issued by the Ministry of Finance at the time of the implementation of the scheme since it clearly stated that only agricultural loans disbursed directly to farmers were eligible for reimbursement. In 2010, the Ministry explicitly stated that agricultural loans extended to micro finance institutions by banks were not eligible under the scheme for reimbursement from the central government.

The bank, however, made a claim under the ADWDRS for certain borrowers sourced through MFIs under the partnership model in the five states.

Though the bank maintained that the loans were direct in nature, the CAG audit found that dis-aggregated data of the loan accounts sourced through MFIs was not maintained by the bank and hence these loans could not be considered as direct lending to farmers since lump sum credit arrangement facility was given to the MFIs against which the MFIs actually disbursed the loan to borrowers identified by them.

This apart, the CAG found that in AP, a sum of Rs 40.76 lakh went to ineligible beneficiaries (132 accounts) and reimbursement was made for an amount of Rs 26.55 lakh though loans had not been disbursed (96 accounts).

When contacted, state finance minister Anam Ramnarayana Reddy said that the government would initiate action if there were any irregularities in the implementation of the scheme. “The total loan waiver in our state was about Rs 12,000 crore. As regards benefiting the MFIs, we should first know how much our share is in the Rs 164 crore that was paid to the bank towards loans advanced to the MFIs. We are yet go into details,” the finance minister said.

Meanwhile, the CAG report said there was also prima facie evidence of tampering, over writing and alteration of records. The CAG noted “the monitoring of the scheme was also found to be deficient”.

It has recommended immediate corrective measures to take action like recovery of money paid to ineligible beneficiaries and loans extended to MFIs, action against bank official and auditors and filing of FIRs in cases of tampering of records, issue of debt waiver and debt relief certificates to farmers.


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