RBI concerned over cases against banks in Maharashtra on farm loans

MUMBAI: Even as Maharashtra initiates criminal proceedings against some banks for "not" meeting farm loan target, Reserve Bank today defended them saying lenders have been doing a commendable job in agriculture sector.

Recently, a section of media reported that Maharashtra government has booked managers of 10 nationalised banks and 14 cooperative banks for their alleged failure to provide loans to farmers.

The decision came in the wake of farmers committing suicide in the state following crop failures.

Concerned over the development, RBI deputy governor S S Mundra said the Reserve Bank had earlier flagged the issue with the Finance Ministry and also written to the Finance Minister when the issue first cropped up.

"We are deeply concerned about these developments... We think that the criminal proceedings is not the right way. Banks have done a good job, particularly, in agriculture lending in the last two years," Mundra told reporters here on the sidelines of an event.

Reeling out statistics he said, "If you look at the budgeted figure each year, which has seen an increment over the previous years, banks have surpassed it."

Mundra said now when the actual action has been taken on the banks, the RBI will again take up the issue with Finance Minister and the state Chief Minister.

"Even if some direction is to be given to banks, it should be done through a proper channel and I think regulators are better equipped to do that," Mundra said.