In Rajasthan Village, SBI Charges Farmers EMIs for Car Loans They Never Sought

SBI had previously charged extra interest on crop loans sought by farmers and had also denied them benefits under the PMFBY, among other things..

Jaipur: State Bank of India, the largest public sector bank in the country, has charged a number of farmers money for taking out car loans against their Kisan Credit Card accounts. Except, none of these farmers in Rajasthan’s Nohar have ever sought or taken a car loan.

The Kisan Credit Card (KCC) passbooks of several farmers who have accounts in the Ramgarh Ujjalwas branch of the SBI,  accessed by The Wire, were found to have an entry “Proc Car Loan” against which amounts ranging from about Rs 2,000 to Rs 5,000 have been debited. 

This irregularity in farmers’ crop loan accounts was discovered by All India Kisan Sabha (AIKS) members in Ramgarh who are actively involved in inspecting the KCC pass books for frivolous charges, especially after the bank was earlier caught charging extra interest on crop loans and not transferring farmers’ share of the Pradhan Mantri Fasal Bima Yojana premium to the insurance companies. 

On July 2 this year, an amount of Rs 1,842.81 was debited from the KCC account of Sukh Dev Bagoria, a farmer in Ramgarh village. 

Also read: Why Is SBI Transferring Farmers’ Insurance Claims to Their Savings Accounts Without Their Consent?

“We don’t understand [pass book] entries written in English. There was a discussion going on in the village about the bank charging us for car loans, so I took my pass book to get it checked and found that I’ve been charged,” Bagoria told The Wire

Shrawan Kumar, another farmer from Dilki Jatan in Nohar was charged Rs 4,382.34 towards a car loan he did not take, on January 7, 2020. “Given our financial situation, it’s difficult for us to purchase even a tractor or any other farm equipment. How can we even think of purchasing a car?” said Kumar.

Shrawan Kumar’s passbook entry showing the ‘car loan’ charges of Rs 4,382.34 being debited from his KCC account. Photo: The Wire

Most farmers have suffered a major loss in income due to the COVID-19 lockdown and the subsequent fall in crop prices. Each charge which is deducted from the farmers’ KCC account adds up to the principal amount and the farmers are required to repay it at 7% rate of interest. 

“At this point, each rupee is valuable. If the bank is going to take away thousands of rupees without any reason, what will we do?” Kumar added. 

The farmers said that they had reported to SBI about the car loan charges but have not yet received any convincing response. 

SBI debited Rs 3,906.98 as ‘car loan’ charges from Rajendra Kumar’s KCC account on February 27, 2020. Photo: The Wire

“This branch deals mostly with the KCC accounts but its officials still don’t spare even a minute to listen to us,” said Rajendra Kumar, another farmer in Ramgarh who has been charged Rs 3,906.98 for a non-existent car loan.

“We are uneducated, so they think that what we say has no importance. The deputy manager, without giving us any reason, simply said that [car loan EMI] will be deducted,” he added. 

Also read: Rajasthan Farmers Denied Insurance Claim Under PMFBY as SBI Didn’t Pay Premium

The bank, meanwhile, said that the car loan entry in the pass books is merely an “error” in the system. 

Speaking to The Wire, Navin Priyadarshi, deputy manager at SBI’s Ramgarh Ujjalwas branch said, “The farmers are not being charged for any car loan. That is actually the processing fee that it charged upon KCC renewal each year. But it mistakenly got reflected as a car loan in the pass book.” 

Manju Devi from Gogamedi was charged Rs 2,255 as processing fees in August 2019. In December, 2019, she was charged Rs 2,630.81 as ‘car loan’ charges that SBI says are processing fees. Photo: The Wire

While the SBI says that the car loan EMI charged from the farmers is actually the processing fees of their KCC loan, the pass books were found to contain a separate entry against processing fees of the same year. 

For instance, on December 20, 2019, Rs 2,630.18 was debited as “car loan” charges from the KCC account of one Manju, a farmer in 12 DPN Gogamedi. An entry from August 28, 2019 shows that she was already charged Rs 2,233 as “processing fees 2019-20.” 

SBI has a ‘habit’ of covering up its fraud by calling it technical error, said Dilip Bhamboo, All India Kisan Sabha (AIKS) member and active social worker in Ramgarh.

“The farmers have been charged processing fees separately under the entry of ‘processing fees’. The car loan EMI is really not the processing fees that the bank would like us to believe it is,” Bhamboo added.

How does this affect farmers?

A KCC account is a cash credit account under which farmers seek short-term loans for crop production in a particular cropping season, according to a limit sanctioned by the bank.

For this KCC loan, farmers are charged 7% rate of interest under the limit of Rs 3,00,000 and are required to pay back the entire principal amount along with interest within 365 days, or else a higher rate of interest will be charged on the credit taken.

When the bank debits certain amounts like processing fees, audit fees, inspection fees or the recent “car loan EMI,” from the farmers’ crop loan account, they add up to the principal amount that the farmers need to repay with interest within the period of 365 days. 

The deadline of 365 days is calculated from the date when the principal amount is sought and not when other fees are debited from the account. 

An example: a farmer takes a KCC loan worth Rs 2,00,000 in Kharif season in June. Now, within 365 days from the date of sanction of this loan, he will have to repay Rs 2,00,000 plus an interest of Rs 14,000 [7% of Rs 2,00,000] which comes to Rs 2,14,000.

If in December, the bank debits Rs 3,000 as car loan EMI from his account and Rs 2,000 as inspection fees, then he would be charged 7% interest on Rs 2,05,000 (Rs 2,00,000 plus Rs 5,000) which is Rs 14,350. By June next year, the farmer will have to repay Rs 2,19,350 instead of earlier Rs 2,14,000 (when no charges were debited from his account by the bank).

Manju’s passbook entry showing that on August 28, 2019, she was already charged Rs 2,255 as processing fees for 2019-20. Photo: The Wire

SBI’s past record 

State Bank of India has a patchy record. Last year, SBI in Ramgarh had transferred the Pradhan Mantri Fasal Bima Yojana claims of the Kharif 2018 season from farmers’ KCC accounts to their savings accounts without their consent. It had added to the loan repayment burden on the farmers. 

The Ramgarh branch had also charged extra interest of about Rs 64 lakh on KCC loans from about 500 farmers in the village. After the farmers staged protests, the bank was forced to reverse the excess interest it had charged. However, many farmers have not received their money back yet.

Earlier in 2018, it had even deprived farmers of the benefits of the PMFBY.

Approximately 3,052 KCC-holding farmers of Ramgarh Ujjalwas, Gorkhana and Bhukarka villages in Rajasthan’s Hanumangarh district were denied insurance claims under the PMFBY because SBI had failed to credit the debited premium of farmers to the account of the designated insurance company – Bajaj Allianz.

The SBI’s Ramgarh Ujjalwas branch had transferred the premium to the account of Agriculture Insurance Company of India (AIC) instead. When the company returned the money, the deadline for payment had already passed.

The other two branches – Bhukarka and Gorkhana – on the other hand, had made no attempts to pay the premium.