Ram Singh, a Kisan Credit Card account-holding farmer in Ramgarh, Rajasthan was credited ₹44,040 as a crop insurance claim as is normally done. But on September 30, SBI transferred this money to his savings account without asking him. Another farmer with the name Subhash Kumar was credited ₹11,268 as his insurance claim in August, but a month later, on September 30, SBI transferred his money to his savings account as well.
Almost a month after the insurance claims of the Kharif 2018 season under the Pradhan Mantri Fasal Bima Yojana (PMFBY) were credited to the Kisan Credit Card (KCC) accounts of several farmers in the Ramgarh village of Rajasthan’s Hanumangarh district, the State Bank of India (SBI) has transferred them to their savings accounts without their consent, reported The Wire.
Apparently, it seems like a harmless move, but this can actually cause a lot of distress to farmers if their loan payment burdens spiral. In reality, the KCC works as cash credit for a farmer, wherein depending upon the upper limit decided on by the bank, a farmer could seek short term credit loans for crop production requirements. This amount can be expanded as per need, but a farmer is required to repay it within a year, else an increased ROI (Rate of Interest) is charged on this credit.
For example: If I were to have an approved KCC limit worth ₹3,00,000, and I choose to take ₹2,00,000 at a rate of 7%, I have to pay the said amount plus the interest within one year.
In case I withdrew this amount in August 2018, and for some unavoidable reasons I am not able to arrange for the interest value, i.e. ₹14,000 but I have received my insurance claim worth ₹40,000; I can use that to deduct the amount I owe the bank. So, ₹2,14,000 becomes ₹1,74,000 after a deduction value of the insurance claim worth ₹40,000. If I were not able to repay the bank any part of the amount, the bank would continue to charge me additional interest on ₹1,60,000 [deducting Rs 40,000 from Rs 2,00,000].
In either case I am secure that my burden would reduce substantially.
A bank could add an auditing and processing fee on my account balance, and I would be charged ₹2,00,000 plus those charges. Now, when the bank transfers the amount to my savings account instead of my KCC, the amount of the KCC loan would only increase.
For those who are unable to pay it back, the bank would be able to suitably charge additional interest from the farmers.
Speaking to The Wire, the SBI manager in Ramgarh, Mukesh Kumar, said, “We transferred the claims to their savings account so that they would receive a message that the claim has reached them. Since it’s a festive season now, we want farmers to spend money so that the economy gets a boost.”
For State Bank of India, this is not the first time they are engaging in immoral and unethical activities. The Ramgarh branch is also charging extra interest of about Rs 64 lakh on Kisan Credit Card loans from about 500 farmers in the village, reported The Wire.
Before this, SBI also deprived farmers of the perks of the crop insurance Yojana, i.e. the Pradhan Mantri Fasal Bima Yojana, according to The Wire.
In September 2018, approximately 3,052 KCC-holding farmers of Ramgarh Ujjalwas, Gorkhana and Bhukarka villages in Rajasthan’s Hanumangarh district were denied insurance claims under the PMFBY. The SBI had failed to credit the debited premium of farmers to the account of the insurance company – Bajaj Allianz.
The SBI’s Ramgarh Ujjalwas branch had transferred the premium to the account of Agriculture Insurance Company of India (AIC) instead. By the time the company returned the money, the deadline for payment had already passed, The Wire reported