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DCBs Hit as Paddy Payment Biz Moves to Nationalised Banks

Published: 15th September 2014 06:05 AM  |   Last Updated: 15th September 2014 06:05 AM   |  A+A-

PALAKKAD: With yet another paddy procurement season set to begin in the state from September 16, Supplyco is all set to break its time tested relationship with co-operative banks once synonymous with the lowly farmer in the rural heartland. The nationalised banks which are casting their net wide are all set to cash in on the multi-crore seasonal business.

PADDY GROWING.JPGThe District Co-operative Banks (DCBs) are unable to mobilise cheap credit to fund paddy procurement and their loss of business to nationalised banks is likely to jeopardise the repayment of loans disbursed by the co-operative banks in the state.

Till two years ago, it was through the co-operative banks that the 1.50 lakh registered paddy farmers in the state used to receive their payments from Supplyco. But now Supplyco is entrusting more and more districts to nationalised banks. The Prime Minister’s Jan-Dhan Yojana, which promises zero balance and insurance benefits, has made the nationalised banks go all out and woo farmers.

“The district co-operative banks are unable to cater to the needs of the farmers. They could not execute payments immediately based on the PRS, even though we had entered into an MoU with them,” said Supplyco managing director A T James.

The Canara Bank which has been entrusted three districts - Palakkad, Kottayam and Allapuzha - said they have set aside Rs 500 crore for the paddy procurement programme in the state. “We are ready to make payments against paddy receipts in the districts of Malappuram and Kozhikode as well,” said an official of Canara Bank. 

During the last season, payments worth Rs 47.37 crore and Rs 19.88 crore were made by the Canara Bank in the districts of Alappuzha and Kottayam respectively. The payments made in Palakkad was to the tune of Rs 16.01 crore.  Supplyco sources here said that of the procurement price of Rs 19 per kilogram paid to the farmer, Rs 13.10 is provided by the Centre and Rs 5.90 by the state government.

Around 5.25 lakh metric tonnes are procured in the state in both seasons put together. The share of the state government, which amounts to Rs 300 to Rs 400 crore annually, is often delayed. An amount of Rs 150 crore is still due from the state government. Since Supplyco does not have its own fund, it used to avail the overdraft facility at 10.5 per cent to give to DCBs. “Therefore we had asked DCBs to pay the farmers immediately by collecting the PRS as collateral. The Supplyco will then reimburse the amount to the DCBs along with 4 per cent interest within one year,” Palakkad District Co-operative Bank general manager A Sunil Kumar said.

“It is true that we had signed MOU with the Supplyco for providing Rs 50 crore to farmers within a week of being issued a receipt. Since it was a huge loss to primary service co-operatives, they were reluctant to pay the farmers. We were utilising the depositors’ money collected at an interest rate of 10.45 per cent, since we are unable to get agrarian re-finance credit at 4 per cent. We could get agrarian credit at 7 per cent only, of which 3 per cent was being given as subvention by Nabard through state co-operative banks (SCBs). Since SCBs are weak, Nabard has not given the 3 per cent subvention for the last two years,” Supplyco Assistant Manager (Project and Paddy procurement), Ernakulam, C J Sunny said.

Though it has been stated that Rs 50 crore would be paid by the Palakkad DCB, Rs 30.65 crore is yet to be paid to the farmers in the district. In Thrissur district, of Rs 130 crore paid to the farmers, Rs 58.5 crore was paid through Bank of India and Supplyco paid the remaining Rs 71.5 crore from its own fund.

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