Move to divert MML funds for farm loan waiver triggers row

Government to invest firm's Rs 1,400-cr surplus in Apex Bank

In a setback to the state government, employees of Mysore Minerals Limited (MML) have opposed diverting its surplus funds to cooperative banks to meet Chief Minister Siddaramaiah’s commitment of waiving farmers’ loans.

Getting the profit-making MML to deposit its investible surplus funds of Rs 1,400 crore with the Karnataka State Cooperative Apex Bank Limited is one way the government is looking to capitalise cooperative banks to make up for the Rs 8,165 crore waiver of short-term loans that 22.27 lakh farmers had borrowed.

Depositing funds with cooperative funds is not feasible, the Mysore Minerals Employees’ Association has stated, while painting a gloomy future ahead for the company. About 90% of the company’s mining operations have been stalled due to environmental regulations and 2,422 employees have left the workforce since 1998, with over four-fifths of the existing 900 employees due to superannuate in the next three years, the Association pointed out.

“Of the seven operational mines, only two iron ore mines at Subbarayanahalli and Thimmapanagundi are profitable and the former’s mining contract is set to end in a few months. We stare at the possibility of having no mining activity due to unavailability of mines,” the Association has warned the MML management in a letter dated September 29. At present, MML has Rs 1,980 crore in funds of which Rs 400 crore is earmarked for developmental activities and Rs 1,580 crore is deposited with Canara Bank, Union Bank, Vijaya Bank among others.

The government is keen on going ahead with the plan so much so that it has overruled guidelines issued by the Department of Public Enterprises (DPE) in 2012, according to which such an investment cannot be made.

Documents show that MML, internally, is uncomfortable with the plan. As per DPE guidelines, Apex Bank is not a scheduled commercial bank (neither public nor private); its net worth is less than Rs 500 crore and its three-year net profit is not considerable. Also, the investment sought (Rs 1,400 crore) is more than the 60% cap DPE has prescribed for fund deposits in public sector/rural banks.

BJP state president B S Yeddyurappa hit out at the chief minister for not implementing the farm loan waiver announced in June. “Not a single farmer has benefited,” he said. “The government has loans worth Rs 1.33 lakh crore and the 14th Finance Commission grants worth Rs 2.19 lakh crore. Where did this money go? Why is the chief minister forcing MML to part with funds?”