RELIEF: DEBTRIDDEN FARMERS CAN SEEK INTEREST CUT, SAYS SUPREME COURT

NEW DELHI: Farmers unable to repay loans due to failure of crops or natural calamities will be able to approach courts for a cut in interest rates for their agricultural loans, provided his/her state has a local debt relief law to protect the farmers’ community, the country’s top court has said.

The Supreme Court said the Banking Regulation Act, which bars courts from re-examining the terms and conditions between a bank and its client, will not be applicable to agricultural debts in states where State Debt Relief Acts are in force.

Farmers can now make pleas to revise interest rates on the ground that they are excessive in the event of a default due to agricultural crisis. There are many instances of farmers committing suicide after being unable to repay their loans. In the past one year, five states – Uttar Pradesh, Rajasthan, Madhya Pradesh, Punjab and Maharashtra – have announced farm loan waivers.

The SC rejected the Centre and Reserve Bank of India’s argument that neither the judiciary nor states can have any say on the Banking Regulation Act.

A bench of justices RF Nariman and Navin Sinha said on Friday that section 21A of the Act would not be applicable because states have exclusive power to legislate on “land improvement and agricultural loans”. The constitutional scheme, insofar as agriculture is concerned, is that it is an exclusive state subject, said the court. The judgment was delivered on a five-year-old PIL filed by activists who said that section 21A denied protection to agricultural loans from excessive interest rates.

REJECTS CENTRE AND RBI’S ARGUMENT THAT NEITHER THE JUDICIARY NOR STATES CAN HAVE ANY SAY ON BANKING REGULATION ACT