PASS THE LOAN OR FACE THE BULLET
Goons have a new way of making money— threaten bank managers to get loans released, then refuse to pay up
Phanendra Shekhar, 40, manager of the Punjab National Bank’s ( PNB) Bharatpura branch on the outskirts of Patna district, knew his was a tough job. One of his predecessors, Heera Lal, was first abducted when he refused to release loans as dictated by powerful middlemen in favour of loan applicants with little or no accreditation, and was then dismissed from service when he surrendered to the wishes of the goons to grant loans according to their diktats.
Shekhar assumed charge at the branch in July 2011, and immediately put his foot down on undeserving loan requests, refusing to entertain goonsturned- middlemen, who first offered him ‘ cut- money’, and then went to his home to deliver threats in February 2012 when he refused. On March 7, 2012, Shekhar was shot dead on his way back home from work.
Brother of a police sub- inspector, Shekhar had hoped his police connections would keep the criminals at bay. But as it turned out, this only served to delay the inevitable. The goons tolerated his defiance for eight months before they had him killed.
Not all powerful intermediaries have waited this long to settle scores with upright bank managers. In July 2011, Lal Babu Singh, 54, manager of the Sarmastpur branch of Bihar Kshetriya Gramin Bank in Muzaffarpur district, was killed within three months of joining work. Singh, too, had refused to entertain underserving loan requests.
On June 14, the head cashier of State Bank of India’s Patliputra branch in Patna, James Michael Dextas, was shot dead in his office. On July 23, Rakesh Kumar Ranjan, a PNB agriculture loan officer, was run over in an accident that looked suspiciously deliberate. “Who wants to refuse loans and get killed? Many of us have compromised after a reality check,” says a manager at a Patna district branch.
Not too long ago, Bihar was known for its “goonda banks”, wherein thugs pocketed exorbitant interest rates on loans, transforming moneylending into an organised business. Today, these goons have opted for a career shift. With “goonda banks” made unviable by the recent improvement in the state’s lawand- order situation, goons today act as go- betweens, to get bank loans sanctioned in favour of undeserving applicants, and keep a share of the spoils, knowing that few in Bihar return bank loans in their entirety.
They focus on facilitating release of agriculture loans— a low risk, high returns sector. As a policy, both Central
“Circle officers often issue LPCS against affidavits. A bank is then forced to release a loan against an unverified LPC.”
and state governments put pressure on banks to disburse agriculture loans. This thrust has raised Bihar’s agriculture credit ratio to 38.52 per cent of total bank loans released, against the national benchmark of 18 per cent.
“Banks are given a target figure for granting Kisan Credit Cards ( KCC) as soft loan to farmers. This is a priority area, and though targets are seldom achieved, managers feel the threat of transfer or other tough action if they don’t achieve at least 50 per cent of the goal. Unscrupulous intermediaries use these circumstances to their benefit, arrange loan seekers and bag a ‘ cut’ in the process. The trouble begins when the go- betweens get greedy, and produce people with fake identity and land- ownership papers, and then put pressure on us for loans. More often than not, we bow to their wishes. After all, they are goons, and the state government doesn’t give us any security,” explains a manager of a branch in rural Patna.
Postings at rural branches of nationalised commercial banks in Bihar have become a double- edged sword for officers— one can either follow the middleman’s diktat and accept ‘ cut money’ or get thrashed, or worse, killed for disobeying the criminals.
Every manager of a rural branch can release up to Rs 5 crore in loans a year. Bihar has 4,723 branches, a majority of which are rural. The consolidated figure of yearly agriculture loans adds up to a huge sum. Bihar’s State Level Bankers’ Committee ( BSLBC) figures show that banks have released over Rs 10,000 crore as agriculture loan in 2010- 11 alone.
UPA 1’ mega farm loan waiver, an
S nounced in Union Budget 2008- 09, covered all agricultural loans to small and marginal farmers. It has become another magnet for loan seekers, who hope that in the run- up to the 2014 Lok Sabha polls, the Central Government will once again announce a similar largesse, exempting them from having to pay up. “Loan seekers believe they don’t need to pay up. Unsurprisingly, they are happy to hand over up to half the loan amount to facilitators, who share the booty with pliant bank managers,” says a bank officer.
The figures show a rush for soft agriculture loans and corroborate the story. In 2010- 11, Bihar’s banks gave KCC to 1,402,830 people, 30 times the 1999- 2000 figures of 47,347 KCC beneficiaries in the then- undivided state. Incidentally, the consolidated BSLBC figures of non- performing assets of banks has touched Rs 3,500 crore, of which agriculture loans account for Rs 1,051.14 crore.
As for recovery of loans, less said the better. A total of 3,26,359 certificate cases were pending for disposal on March 31, 2011, which involve a total amount of Rs 1,100.26 crore.
Bihar Deputy Chief Minister and Finance Minister Sushil Kumar Modi blames bankers for the frauds. “Corruption in Bihar’s banks is higher than in any government office. Banks must implement the Right to Public Services Act to eliminate middlemen and opportunities for corruption,” he said.
Sporadic police investigations into various cases of loan fraud have also confirmed large- scale irregularities in the disbursal of KCC loans. In May this year, Araria police arrested three branch managers and two head clerks from Central Bank of India in connection with a Rs 15 crore KCC loan fraud. The loans were given on the basis of forged documents in connivance with middlemen. In Khagaria, cases have been filed against several branch man- agers of Bank of India, Allahabad Bank and Gramin Bank. In June, the Bihar police lodged an FIR against 92 middlemen in Nalanda for fraudulently withdrawing KCC loans.
Police probes into Shekhar’s death have also opened a can of worms. His predecessors have been found to have allowed 55 fake loans. The main accused, Ravindra Yadav, now in judicial custody, procured bank loans against every family member, as well as in the names of dead people.
“Bankers disburse loan against an applicant’s land possession certificate ( LPC). But circle officers often issue them against affidavits, without first matching them with available records, the first step towards a loan fraud,” says Kumar Arvind, general secretary, PNB Officers’ Association. Arvind concedes government pressure for the release of KCC loans has led to mushrooming of these powerful middlemen.
Meanwhile, more than four months after Shekhar’s death, his widow Namita Dayal and their two sons are still waiting for justice. The bank is yet to give her a job as compensation, though Arvind says it is being processed. “The Rs 13,000 pension— less than a third of Shekhar’s pay— is not enough to support our two sons’ education,” she rues.