CHENNAI: Stepping in to address the severe cash crunch due to demonetisation that has crippled farming in Tamil Nadu during this crucial Samba crop season, the State government directed the district central cooperative banks (DCCBs) to disburse agriculture loans to farmers attached to the primacy agricultural cooperative credit societies (PACCS) under each of them. For this, a new KYC compliant account will be opened at the DCCBs for each loanee farmer.
The loan amount will be credited into this account, from which the PACCS can debit appropriate amounts for supplying fertilisers, seeds and also to make available farm equipment, crop insurance premium. In effect, the DCCBs and the PACCS under them will jointly work on digitising much of the financial transactions on behalf of the farmers. These temporary measures directed by the State government under a GO issued on Tuesday came after a detailed assessment on the demonetisation drive’s impact on cooperative institutions in Tamil Nadu, especially the availability of credit to farmers during this peak agriculture season, by the registrar of cooperative societies. Being non-banking entities, PACCS have not been allowed to exchange the demonetised notes.
Due to this, the functioning of the societies across the State came to a standstill, said the registrar in the report to the government, explaining how the issue of crop loans at the time of peak agricultural season has been completely stopped because they do not have the required currency for payment. This, in turn, has led to a “serious crisis of cash with the loanees due to inadequate availability of funds,” the GO said.