Chidambaram chides bankers over credit to farmers

On Saturday, Finance Minister P Chidambaram took a road less travelled by most politicians. Driving from Bangalore to Mysore, he stopped at villages to listen to farmers' woes, scolded bankers for their apathy, and delivered solutions impromptu.

He promised to travel to rural India as much as was "physically possible" to achieve the government's ambitious plan to increase lending to farmers by 30 per cent to more than 1 trillion rupees this financial year.

Dressed in his trademark long-sleeved white shirt and dhoti, Chidambaram's journey to rural Karnataka began after a brief meeting with the heads of local banks in Bangalore. In attendance were the heads of Vijaya Bank, Canara Bank, and Syndicate Bank, and state and central government officials.

When the journey got going, the cavalcade included foreign television crews and a battery of local journalists. The objective of the tour, Chidambaram said, was to review progress in banks' credit to farmers.

"The purpose is very simple: the government has announced the lending policy. All banks have agreed," he told reporters.

"We must ensure that agriculture credit goes to the farmers in time. That is the first objective."

"Next objective is to see that education loans are granted. Students must access loans for professional courses."

"Then we are looking at self-help groups. We are encouraging self-help groups."

"The idea is to see agriculture credit flows," he said.

Despite denials of successive governments, newspaper reports say thousands of farmers have committed suicide since 1987 in several states, even in the front line agricultural state of Punjab.

Farmers have been driven to suicide mainly because of mounting debts and unpaid loans. Some economists worried that for banks, agriculture credit had been downgraded to a low priority, and rates on crop loans were on an average higher than those on credit offered to urbanites to buy cars and houses.

Worse, an alarming majority of farmers depend on moneylenders who charge exorbitant rates of interest, sometimes as high as 200 per cent or 300 per cent.

It did not take long for Chidambaram to lose his cool. At his first stop at Bidadi, an hour's drive from Bangalore, a frustrated Chidambaram asked the speakers to stop singing praises of the officials of the local branch of banks.

He wanted to hear problems and not accolades and flattery of officers.

He had seen through the well-rehearsed speech making exercise by some locals, who, evidently, enjoyed the favours of the branch. His intervention had the desired effect, and farmers began to pour out their woes.

There were persistent demands from farmers for a cut in loan rates.

"I also wish that I can reduce interest rates. Let us be patient, it is not an easy decision," he told them.

Although his answer did not bring cheer, it appeared to raise some hope.

At Somanahalli (former Karnataka Chief Minister S M. Krishna's village) near Maddur, Chidambaram stepped up the heat on bank officials.

He fumed at a bank branch manager for charging a monthly instalment of Rs 600 to repay a 10-month loan of Rs 5,000.

He dispensed solution to a young girl who wondered how she could finance her ambition to be a chartered accountant. Chidambaram requested the chairman of Vijaya Bank to advance her an educational loan.

Often, the finance minister had to calm farmers who grew increasingly impatient as they awaited their turn to speak.

"Shanti" was his constant refrain. Farmers in these areas cultivate mainly paddy, sugarcane, and groundnut. The fortunes of the paddy and cane farmers depend on the availability of water. He pulled up bank officials for delays in disbursement and denying loans to the needy.

In Somanahalli, M S Kapur, chairman of Vijaya Bank, was at the receiving end when Chidambaram publicly warned that his bank seem to attract more complaints than its peers in the industry do. As the heat took its toll and as the farmers' cup of woes overflowed, the finance minister's mood grew darker.

"I am not satisfied that the message has gone to every branch manager. You heard some complaints," he told reporters as he settled for a quick lunch in Mandya, 99 km from Bangalore, of curd rice and bisibele bath, a popular local speciality of rice, lentil, tamarind, chili powder, ground spices, topped with ghee and served with fries such as wafers or papads.

But all was not lost in tackling the passive bankers: "My key take is the message has gone down this month better than last month. In July, the message was not very clear."

He was optimistic. "August is better than July. September will be better than August. October will be better than September. The message will go (further). All branch managers will be held accountable for achieving the target."

Delivering on the government's promises requires politicians to touch base with voters. File pushing, speeches are passe. "It is not enough to sit in Delhi and announce the policy. If you sit in Delhi, you get one kind of information...all in reports. Unless you go down (to the villages), how do you find out? Therefore, I told all MPs: you please go in your constituency. I will travel as much as possible."

And that too is not enough. He will put the pressure at the top too.

"Immediately after the parliament session is over (on September. 3), IBA (Indian Banks' Association) has been asked to call a meeting of all chairman of banks. The RBI governor will be there, then we will review the progress made up to August and review it again in February," Chidambaram said as he tried out a local dessert.

He too would participate in the bankers' meeting. "I think, somehow, impression has gone down that farm lending is not a profitable activity," he said.

Bankers have the impression that "lending to industry is good. Housing loan is good. Refrigerator loan is good, scooter loan is good. But farm loan is bad."