At the entrance to Manikpur tehsil in Chitrakoot district of Uttar Pradesh is a wall, painted to resemble a blackboard, unmarked by graffiti or paan stains. It is no ordinary wall for it serves as a public record of loan defaulters, most of them farmers. Periodically updated, it is ominously titled “The Top 10 defaulters of Manikpur tehsil”. To a drought-hit farmer, it is a daily reminder of unpaid loans and the humiliation and harassment that go with them.
Ram Lochan is currently number four on the wall. “Ram Lochan, s/o Nanku, Naya Chandra village, Allahabad Bank, debt of Rs 490,006,” reads the entry. The 70-year-old farmer has held that spot for two years now. His son Jagatpal complained, “Almost every farmer in our village is indebted, but we are the only ones up on that wall.”
This public naming and shaming of defaulters is part of the loan recovery process, often coercive, followed by banks and tehsils.
The wall in Manikpur – located in the Bundelkhand region, which comprises seven districts of Uttar Pradesh and six of Madhya Pradesh and has been drought-hit since 2003 – should not exist. In 2013, the Allahabad High Court ordered an end to coercive loan recovery, responding to a spate of farm suicides in Bundelkhand. Two years later, as drought set in, the Samajwadi Party government in Uttar Pradesh announced a ban on all farm loan collection. And in September this year, the Reserve Bank of India issued a circular asking banks to stop making photographs of defaulters public.
But none of these orders have helped farmers like Ram Lochan. Neither have the numerous promises of loan waivers made by governments and political parties in the state since 2009.
Empty promises
With the Assembly elections in Uttar Pradesh in early 2017 drawing near, the kisan has once again become an integral feature of the poll campaign, with parties promising them everything from debt waivers to crop insurance. In the last 10 months, the Central and state governments have launched an array of farmer-friendly schemes, especially in drought-hit regions like Bundelkhand.
The Congress has vowed to write off farm debts within 10 days of coming to power, while reminding voters of its track record. But a 2013 report by the Comptroller and Auditor General shows the debt waiver scheme launched by the Congress-led United Progressive Alliance at the Centre left out one in 10 eligible farmers while 6% did not receive benefits according to entitlements and 35% were not given debt waiver certificates, making them ineligible for fresh loans.
After the last Assembly elections in 2012, the Samajwadi Party government had rolled out a Rs 1,650-crore debt waiver scheme. But that, too, was ineffective as ineligible farmers made the cut while only a few banks – the Land Development Bank and cooperative banks – were covered.
Cornered by debt
In the absence of any relief, farmers have continued to suffer. Those in Bundelkhand, especially, have seen their debts mount on the back of consecutive crop failures since 2014. According to Bundelkhand Kisan Union leader Anil Pradhan, agricultural indebtedness in the region is 80% against the state average of 45%.
Abhinandan Mishra, the lead district manager who oversees the credit plans of 16 banks in Chitrakoot, said that loans worth Rs 818 crores were disbursed last year, of which unpaid dues amounted to Rs 664 crores.
As the number of farm loans rises each year, so does the number of defaulters. “Nearly one-third of all loans taken on Kisan Credit Cards have been restructured," Mishra said. "Currently, UP Allahabad and Allahabad Gramin Banks have the highest number of defaulters.”
UP Allahabad Gramin Bank regional manager SK Patra said non-performing assets in Chitrakoot had doubled from Rs 52 crores last year to Rs 100 crores this year. “It is getting difficult to help the farmer,” he said. “If the loans are not regularised, the farmer is deprived of crop insurance, the interest rates are high and he is ineligible for fresh loans.”
Mishra said the farmer was not a bad customer, just one with many problems. “Loan recovery is very slow in Bundelkhand due to consecutive droughts and this builds pressure on banks,” he added.
Coercive tactics
According to SK Patra of the UP Allahabad Gramin Bank, the recovery process begins with banks sending a notice to the borrower. If the borrower is deemed a wilful defaulter – one who has the ability to pay but chooses not to – a legal notice is issued. In many cases, depending on when the loan was taken and the farmer’s financial state, banks recommend restructuring of the account, which entails relaxing some of the original terms and conditions, such as interest rates.
Apart from banks, tehsils also monitor loan repayment, often by sending recovery agents to the borrower’s home.
The pressure of bad loans leads to the use of coercive measures such as threats, public naming and shaming, legal notices without warning and even jail time.
However, bank and tehsil officials denied the use of such methods. Patra said his bank was involved in organising camps in villages, going door to door to raise awareness and involving the panchayat. Manikpur tehsildar Raju Kumar Verma, too, said, “There is a freeze on farm loan recovery and no coercive collection is on.”
However, farmer Jagatpal said that if the tehsil had issued a notice about the suspension of loan recovery, he was unaware of it. “The amin (recovery agent), sometimes even two of them, keeps coming,” he added.
Lost in this cycle of crop failure, mounting debt and loan recovery are the tragedies playing out in the homes of affected farmers.
12 years in debt
Ram Lochan’s tractor is 12 years old. So is his loan of Rs 2.5 lakhs from the Manikpur branch of UP Allahabad Bank. But that has more than doubled now. The farmer has suffered successive crop failures since the drought in 2003. More recently, heavy rain in August washed out his sesame crop. The crisis has forced two of his three sons to migrate for work, leaving their families behind.
The third son, Jagatpal, has inherited his father’s 14 bighas and his loan. In 2014, the recovery agents came knocking on their door. “They handed us a recovery certificate and threatened to seize our tractor and auction our house and lands,” said the 45-year-old farmer. “Our name went up on the wall… it was a humiliating experience.”
Since then, the family has been paying the bank monthly instalments of varying amounts. They have also borrowed more, informally.
The family of 18 relies on one ration card issued to them under the National Food Security Act. “What do we eat?” asked Jagatpal. “Sometimes we eat salt and roti for days, and at other times, nothing.”
Lochan does not know when his financial troubles will be over. “Perhaps another three years,” he said, hazarding a guess. “The bank doesn’t tell us how much of the loan is left to repay. Just last month, I enquired in Manikpur… they said nothing. We ask the amin who comes by every month, but he tells us nothing.”
Tractor trouble
Anil Kumar holds the third spot on the defaulters’ list on the wall, one above Ram Lochan. Ten years ago, he took a bank loan of Rs 3 lakhs to buy a tractor. That amount has doubled to Rs 6.1 lakhs.
“I don’t know how that happened,” he said. “When I bought the tractor, the interest rate was 9%, then it was 14%.”
A 2014 IndiaSpend report explained, “For a Bundelkhand farmer, a loan of Rs 10,000 rises to Rs 18,704 in four years.” It argued that farm loans here were “deadlier than home loans… for the first six months of the cropping season, the interest rate is 4% per annum, skyrocketing to 22% per annum if the loan remains unpaid after a year”.
Last summer, the tehsil sent a recovery agent to Kumar’s home in Kota Kandela gram panchayat. “I wasn’t home but my wife and three children were,” he said. “The amin arrived with a recovery certificate and threatened my children that the bank would take away our cattle and tractor, tear down our house and send me to jail.” A frightened Kumar moved the Allahabad High Court to obtain a stay order against the notice.
He added, “I thought of repaying the loan this year. But how, the crop (sesame) has failed again.”
According to the farmer, the tractor he took the loan for has brought him nothing but trouble. The police have impounded it on more than one occasion and also booked him on the allegation that he is involved with dacoits.
This part of Manikpur is dacoit country, once home to the feared Dadua gang. Farmers still face threats from the remaining gangs.
Last month, the police took Kumar into custody for allegedly “giving Dadua dinner”.
Medical emergencies
Yogendra Kumar Singh, 40, has not had steady employment for eight years. It wasn’t always like that. In 2008, he was a farmer with a plan. “I wanted to start a dairy business, so I took a loan of Rs 1.9 lakh,” he said.
But one family emergency after another ensured Singh’s plan never took off. First, his father was diagnosed with liver cancer and he used up the loan and sold 80% of his 15 bighas to pay for the treatment.
Soon after, Singh’s brother developed kidney trouble and his wife was diagnosed with a heart condition. Over the years, the medical bills piled up and so did the debt, which now amounts to Rs 2.6 lakhs. He worked odd jobs – as a security guard, a courier and a broker – to pay the bills.
Currently, he is defaulter number nine on the wall at Karwi tehsil, also in Chitrakoot district, and the only farmer on the list. He has just received a fresh notice from the tehsil informing him that a date for the sale of his house has been set. Singh will lose his house – which has also been badly damaged by the monsoon – and land if he doesn’t repay his loan by the year-end.
He asked in desperation, “What have I done? Have I stolen the money? Have I looted someone? All I did was take a loan to start an honest business.”
Singh’s wife Archana has frequent anxiety attacks because of the family’s troubles. “The house is torn up and my daughter is of age, and this makes me nervous,” she told Scroll.in, before clutching her chest in pain and collapsing on a cot.
Her sister-in-law Kesar said this was normal. “She faints at least thrice a day,” Kesar said.
Singh said he had tried to get a basic loan under the Pradhan Mantri Mudra Yojana but was rejected because of his credit history. The scheme, with the slogan Fund the Unfunded, offers a basic loan of Rs 50,000 without collateral or a processing fee.
Karwi tehsildar Gulab Singh said the wall was just a record “to motivate debtors to repay loans, not embarrass them”. But that is not how Singh and others like him see it. A lawyer from the tehsil, who did not want to be identified, said, “Of course, debtors should be ashamed. The wall is intended to humiliate them.”
