Farmers lose crop insurance for banks’ neglect: CAG

The Comptroller and Auditor General (CAG) said many farmers lose out insurance claims due to the negligence of banks while pointing out several deficiancies and irregularities financial institution.

Published: 26th July 2017 03:41 AM  |   Last Updated: 26th July 2017 12:33 PM   |  A+A-

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By Express News Service

BHUBANESWAR: Pointing out several deficiencies and irregularities by financial institutions in the implementation of crop insurance schemes prior to the new Pradhan Mantri Fasal Bima Yojana (PMFBY), the Comptroller and Auditor General (CAG) said many farmers lose out insurance claims due to the negligence of banks.

Agencies implementing crop insurance rejected claims of farmers due to deficiencies in submission of proposals by the banks, undue delay in remittance of compensation claims to the bank accounts of
farmers, non-remittance of compensation claims by banks to the accounts of beneficiaries, performance audit report of CAG for 2017 on agriculture crop insurance scheme stated.

“Insurance claims for `2.12 crore of 1,186 farmers were not settled by the Agriculture Insurance Corporation (AIC) between 2010 and 2014 kharif seasons even after two to six years despite entitlement due to errors and omissions committed by the nodal points of banks. Even the State Government has not ordered the defaulting banks to settle the claims from their own sources as per scheme guidelines,” the audit said.

In Mundapadar gram panchayat of Balangir district, Utkal Gramya Bank (UGB) forwarded the insurance proposals of 414 non-loanee farmers under National Agriculture Insurance Scheme (NAIS) for kharif season 2011 to AIC only in October 2011 against the cut-off date of 31 August 2011.

Consequently, AIC did not accept the declarations, and the farmers who subsequently faced crop loss of `66.93 lakh were denied compensation. Though State Government directed UGB in February 2013 to compensate the farmers from its own resources, the regional bank has failed to comply till date, the CAG report said.

The present performance audit report reviews the utilisation of State Governments’ funds, implementation of schemes and monitoring during the period 2011-12 to 2015-16. Odisha was one of the nine test checked states by the CAG.It further noticed that 1,366 non-loanee farmers of Titlagarh in Balangir district submitted proposals for insurance under NAIS to Indian Overseas Bank, Punjab National Bank and Utkal Gramya Bank (UGB). These Banks erroneously categorised the proposals under WBCIS (Weather Based Crop Insurance Scheme) which was not notified by the State Government.

“AIC rejected claims for reimbursement of crop losses. Based on the findings of a fact-finding committee, the State Government ordered the banks in February 2013 to make good the losses to the farmers from their own resources. However, till date, the banks have not compensated the farmers,” the report said.
“Even though the schemes provided for notifying the lowest possible unit of defined area, only Odisha has achieved this by defining the village as the unit for paddy crop with effect from Rabi 2010-11,” it said.

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