Kisan Credit Card loan default: Kisan Credit Card (KCC) is a big government help for farmers. Through this, farmers can take loan from the bank at low interest for seeds, fertilizers, pesticides or farming related needs. But if for some reason the farmer is unable to repay the loan, can the bank auction his land? The answer is- Yes, it can. But, when can the bank auction your land and what are your legal rights.
What is Kisan Credit Card?
Kisan Credit Card (KCC) is a scheme through which farmers can take loans from banks at very low interest rates. This loan is available for farming related needs like seeds, fertilizers, pesticides, irrigation or small equipment.
This scheme was started in 1998, so that farmers do not have to depend on moneylenders and they can get loans directly from the bank. With the help of this card, farmers can withdraw cash or meet farming expenses directly from their bank account.
How much loan do farmers get?
Under this scheme, generally a farmer can easily get a loan ranging from Rs 50 thousand to Rs 3 lakh. This amount may also increase according to the needs and land area of the farmers.
The loan repayment period depends on the crop cycle i.e. usually within 6 months to 1 year depending on Rabi or Kharif season. If the farmer repays the loan on time, he also gets a rebate of 2% to 3% on interest. This means that if you have got a loan at the rate of 7%, after the discount it will come down to 4%.
What will happen if you do not repay the loan?
If the farmer does not repay the loan on time, the bank first sends some reminders and notices. If payment is not made for 90 consecutive days, the bank declares that account as NPA (Non-Performing Asset). This means that the bank starts feeling that now it is difficult to get the money back.
After this the bank starts the recovery process. First an attempt is made to reach a compromise, then a legal notice, and finally the process of land confiscation can be initiated.
Bank notice and government procedure
The bank or cooperative institution sends a recovery notice to the farmer. If the farmer does not pay even after receiving the notice, the bank sends the case to the Tehsildar or district administration.
The Tehsildar considers this amount as ‘revenue arrears’ and starts recovery proceedings. If the situation does not improve, the administration confiscates the land temporarily.
How is land auction done?
If the money is not received even after all the efforts of the bank and the administration, then the bank gets the right to auction the land. The auction process goes like this:
- The bank decides the date of the auction and publishes its information in the newspapers.
- The farmer is given a chance to make payment for the last time.
- If he is unable to repay, the bank auctions the land.
- The loan is repaid from the amount received from the auction.
- If more money is received in the auction, the remaining amount is returned to the farmer.
This entire process takes place under SARFAESI Act, 2002. Under this law, the bank can sell mortgaged land even without the approval of the court.
When can land not be auctioned?
In some circumstances, a farmer’s land cannot be auctioned, even if the farmer has defaulted on the credit card loan.
- If the farmer does not repay the loan due to crop damage due to flood, drought or natural disaster.
- If the government has announced loan waiver or relief package.
- If the farmer is a small or marginal farmer and his land is less than 5 acres.
- If the loan was covered under crop insurance scheme and the money is yet to be received from the insurance.
In these circumstances, farmers may get relief and the auction may be postponed.
What are the legal rights of the farmer?
Even if the situation of auction arises, many avenues remain open to the farmer. He can first talk to the bank and choose the option of re-structuring i.e. resetting the loan terms or one time settlement. If the bank has not followed the rules or adopted wrong procedure, the farmer can appeal to the Debt Recovery Tribunal (DRT) or the court.
Apart from this, the farmer can temporarily stop the auction by taking a stay order from the court. If the bank has taken direct action without giving any notice, then the farmer can also file a complaint in the consumer court and demand justice.
Auction is not the first but the last option.
In case of non-payment of Kisan Credit Card loan, auction of land is possible, but this is not the first step of the bank, but the last step. The bank first tries every kind of recovery and settlement. If the farmer keeps in touch with the bank from the beginning, he can avoid the auction by increasing the loan installments or joining a new scheme.
Therefore, the most important thing is that if there is any problem in repaying the loan, do not remain silent, talk to the bank. Only timely communication and solution can help the farmer save his land.
Also read: Kisan Credit Card: Loan of ₹ 5 lakh at only 4% interest! It is also easy to take advantage of this government scheme