Hyderabad: Farmers who turned millionaires overnight face prospect of losing lakhs

Bank officials at Vijayawada, Mangalagiri, Thullur and Guntur said that anxious farmers were doing the rounds at banks and asking officers how to deposit money without attracting penalty.

Written by Sreenivas Janyala | Hyderabad | Updated: November 14, 2016 2:32 pm
amaravati1 The exemption on capital gains tax for Amaravati farmers is yet to be declared by the Centre, so the farmers with cash in hand are facing a major loss.

Several farmers who sold their land in the Amaravati Capital Region in 2013-14 were left holding a lot of cash in their bank lockers. They are now hunting for friends and relatives who can accommodate deposits up to Rs 2.5 lakh in their bank accounts without attracting a penalty.

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Bank officials at Vijayawada, Mangalagiri, Thullur and Guntur said that anxious farmers were doing the rounds at banks and asking officers how to deposit money without attracting penalty.

Between October 2013 and March 2015, many farmers in the Amaravati Capital Region sold their lands amid reports that the new capital city of Andhra Pradesh would be established there, and land rates went through the roof. Land which earlier cost Rs 40 lakh per acre was sold at Rs 1 crore or more. At least 6,500 acres were sold.

However, as the state government fixed the registration value of land between Rs 8 and 16 lakh, about 95 per cent of the money was paid in cash. While most of the farmers parked the money by purchasing cultivable land elsewhere, building houses or buying luxury cars, some farmers deposited them in lockers or kept the cash in safes at home.

A Balaram Reddy, a real estate agent at Patamata in Vijayawada, said, “There is at least Rs 5 to 6 crore in cash belonging to farmers of villages under Thullur, Tadepalli and Mangalagiri mandals. The farmers, who became millionaires overnight, are running from one bank to another to find ways to exchange the demonetised currency or deposit it. Some are even approaching real estate agents. What can we do?’’

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An SBI official at the Mangalagiri branch said, “Some farmers were lucky that they opened multiple bank accounts during the land deal frenzy in 2014, when banks conducted drives to encourage customers to open accounts. Many of them have four or five accounts. Farmers are spreading the deposits in these multiple accounts. We witnessed a lot of that in the last two days.’’

According to Ramakrishna Reddy, MLA from Mangalagiri, “Some farmers preferred just one account as they wanted less complication. The farmers who accumulated money in bank lockers to use for marriages are doomed.” He added that his phone was constantly ringing as farmers from his constituency were seeking his advice. “They became rich overnight two years ago, and poor by a few lakhs on November 8 night,’’ Reddy said.

The exemption on capital gains tax for Amaravati farmers is yet to be declared by the Centre, so the farmers with cash in hand are facing a major loss.

However, a new business has begun in the villages of the region. Mokamatam Venkatesh, a real estate agent turned currency agent, in Inavolu village said, “Rs 300 commission for a Rs 1,000 note, Rs 150 commission for a Rs 500 note. That is the rate. We take your useless currency notes now and pay you back three months later. There will be nothing on paper; no signatures, no promissory notes, no bonds, etc. Just an assurance that you will get back your money minus the commission after three or four months.”

He added, “Business is good; many people who do not have enough bank accounts to deposit the cash without attracting penalty are my customers.”

“Agents are using accounts of Below Poverty Line (BPL) families, or accounts opened by people under various government schemes to receive benefits, to deposit the money collected from people with lots of cash,’’ an official said.