ADILABAD: A major loan fraud scheme has been uncovered in Adilabad district, with middlemen in cahoots with bank officials exploiting the crop loan and waiver system to cheat vulnerable farmers.
The district police have arrested 34 individuals and registered cheating cases under Section 318 across multiple police stations, following a sting operation that exposed the scam.
The fraud revolves around middlemen who prey on farmers during the Kharif season, offering to repay their existing bank loans. These middlemen charge farmers between Rs 5,000 and Rs 10,000 for their “services,” exploiting a loophole in the banking system.
Farmers typically secure crop loans from banks at a 7 per cent annual interest rate, with a 3 percent bonus returned if repaid within a year. After repayment, banks increase the loan amount by 20-30 per cent for the next cycle, a facility intended to support farmers. However, middlemen and some bankers colluded to manipulate this system, siphoning off significant portions of the loan amount.
District Superintendent of Police Akhil Mahajan said that the district police formed 16 teams across nine mandals - Utnoor, Narnoor, Neradigonda, Echoda, Bela, Talamadugu, Bhimpur, Mavala, and Indravelli to investigate the fraud. The police officers posed as farmers, while visiting banks to gather evidence and identify the culprits. The operation led to the seizure of numerous documents and the identification of 67 fraudulent crop loans.
Echoda Circle Inspector B Raju, who participated in the sting operation, explained the scam’s anatomy. For instance, a farmer with a Rs 1 lakh crop loan incurs Rs 7,000 interest, totaling Rs 1.07 lakh. After repayment through middlemen, banks sanction a new loan, often increased to Rs 1.20 lakh, within three days.
The farmers then transfer the amount to the middlemen. They then take back the money they had paid to the bank on behalf of the farmer and take an extra Rs 5,000, as the fresh loan sactioned is about 20 per cent more and return the remaining amount, which is a very small amount.
In some cases, educated farmers receive slightly higher amounts to maintain their silence. The middlemen also charge an upfront fee of Rs 500 before repayment, with additional amounts collected post-sanction.
“The middlemen exploit the innocence of farmers, and some bankers work hand in glove with them, as it would help them in meeting their loan sanction targets,” Inspector Raju said. The police are now investigating the role of bank officials in facilitating the fraud, with evidence suggesting they alert middlemen once loans are approved, ensuring farmers cannot access funds without the middlemen taking away his money and the “fee”.
The superintendent of police said: “Our teams went incognito, dressed as farmers, and sat with them to uncover the middlemen’s tactics. This is a significant step toward protecting our farmers from exploitation.” The investigation continues, with authorities urging farmers to report any suspicious activity related to their crop loans.