By Express News Service
BENGALURU: After a showdown of sorts between two groups of Congress leaders, chairman and vice-chairman to Primary Land Development (PLD) Bank in Belagavi were elected unopposed on Friday.
A local election shook up the coalition government compelling the Congress central leadership to press into action all its diplomatic channels to curb tension. While the fire may have been doused, ambers of the prestige battle around control of financial institutions continue to breathe. Despite being micro financial institutions, PLD banks and cooperatives societies, according to economists and political analysts, are the symbol of absolute control for the rural economy. Beyond mere financial institutions, PLD banks have become a way to exercise political stronghold over a region by a family or group of politicians.
The long-term loans offered by PLDs to large farmers is what makes control over them lucrative.
“Large part of the control in rural areas is through finance as much land. When one controls a bank it gives them control over the financial system on which the locals are heavily dependent,” says economist and political analyst Prof Narendar Pani.
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For decades, the Jarkiholi brothers have exercised control over cooperative societies and sugar factories in Bombay-Karnataka region. The intervention of Laxmi Hebbalkar into the functioning of a bank’s polls sparked off a clash of egos.
It is not without reason that it is a battle of prestige, analysts believe. For all reasons, control over banks translates to power in politics. “People contest these polls to attain positions where they can help others. Once you control banks, you are in a position to help a lot of farmers. Thus, essentially building a strong vote bank,” says political analyst Prof Harish Ramaswamy. He says loans disbursed through these banks, especially to large farmers, is a promise fulfilled by a politician and receives its returns through votes.
PLD banks get their money from share capital, deposits by members, issue of debentures and funds from central financial institutions. Members with higher shares are given long-term higher loans (10-15 years) with low interest rates.
A report from the Karnataka State Cooperative Department states that there were 175 PLD banks across the state in 2010-11 and Belagavi had the second highest number of banks (10), while Uttara Kannada had 11.While Jarkiholis control most of the PLD and cooperative banks, one institution’s election became a standoff. “It could be just one bank, but the fact that Laxmi Hebbalkar could pull it off in her favour shows she is capable of hitting them where it hurts,” Prof Pani says.
For now, the Congress may have succeeded in painting a picture of all being well, analysts believe that the repercussions of the Belagavi PLD bank polls will be felt at a later stage.