'Anti-farmer’ banking rules: Leaders seek RBI intervention in Karnataka

Bengaluru: A delegation of farmer leaders, led by Kurubur Shanthakumar, president of the Karnataka state farmer organisations’ federation, held a meeting with senior officials of the Reserve Bank of India (RBI) on Thursday to raise serious concerns over recently implemented banking regulations.

The meeting was held at the RBI regional office here with general manager Meenakshi Gad and manager Vijayashree. The farmer representatives submitted a memorandum, demanding the immediate withdrawal of stringent and impractical rules for gold loans and agricultural credit.

Shanthakumar said the new RBI guidelines, effective from April 1, seem designed to push farmers away from formal banking and into the clutches of private moneylenders and finance companies. 

“The requirement of a CIBIL score, income certificate and PAN card for securing gold loans is devastating for farmers who need emergency funds for health, education or weddings,” Shanthakumar said. 

He said the previous system allowed farmers to renew gold loans by paying only the interest, whereas the new rules mandate the full repayment of principal and interest before a fresh loan can be sanctioned.

Key demands 

Scrap SARFAESI Act for farmers: The leaders demanded an end to the practice of seizing and auctioning agricultural land and homes under the SARFAESI Act, when farmers default on loans.

Gold loan valuation: The delegation criticised banks for linking gold loan amounts to land acreage (Rs 1 lakh per acre) rather than the actual market value of the gold pledged.

Educational loans: They insisted that CIBIL scores should not be a criteria for providing educational loans to children of farmers and labourers.

Abuse by pvt finance firms: The federation highlighted how private firms trap farmers by extending loan tenures (from 15 to 25 years) without proper consent, leading to long-term debt traps.