The Maharashtra government on Tuesday decided to shut the state’s apex land development bank, putting an end to past efforts at reviving it. The state cabinet approved a proposal for closing down the bank. The bank which was promoted originally to provide a boost to the state’s rural economy and to offer loans at affordable rates to farmers, has been in the red for over two decades. It had even gone under liquidation in 2002, but the state had revoked this in 2008 in an effort to resume credit supply after a farm debt waiver from the Union government helped write off a large component of the bank’s outstanding debt. But with debt mounting again, the government has decided to close down the bank. [related-post] Public works department minister Chandrakant Patil said that the bank owed the state government Rs 1,900 crore, while Chief Minister Devendra Fadnavis said that the bank’s consolidated loss was in excess of Rs 3,200 crore. The Chief Minister said that the government plans to make good its losses by taking over properties owned by the bank and its 29 district branches. “We plan to use many of these to set up new public offices. The rest would be auctioned,” Patil said. The government has also devised a one-time settlement scheme for the 38,000-odd farmers, who have got loans from the bank. “No interest or penalty would be charged from such farmers. We plan to recover Rs 300 crore through one-time settlement,” Patil said. The government will dole out a Rs 70-crore compensation package for 1,046 employees of the bank. Attempts will be made to accommodate staff below 50 years in another government service, Patil said. The government plans to spend about Rs 200 crore to pay off dues of bank’s employees and other liabilities. The rest of the money would be ploughed back into the state treasury. On the basis of recommendations by an RBI-appointed expert panel, the previous Congress-NCP government had considered a proposal to infuse Rs 500 crore to revive the bank. But just before the BJP-led government came to power in the state, a ministerial committee, under former cooperatives minister Harshavardhan Patil, had proposed the bank’s closure, arguing that the revival measures had not taken off. The Fadnavis government has backed the previous committee’s proposal. A senior state official said that it was felt that the prime purpose of the land development bank is defeated now with other district cooperatives and private banks surpassing it in the business of providing loans to farmers. OTHER CABINET DECISIONS * Amnesty for LBT arrears: The state cabinet approved a proposal to roll out an amnesty scheme for traders for payment of arrears in local body tax. The scheme, to be launched from June 1, will provide for writing off penalties and interest for arrears up to March 31, 2015, provided these are paid before July 31, 2015. * Subsidy for sugar, grant for paddy: The cabinet decided to pay sugar mills a subsidy of Rs 1,000 per tonne to help them clear stocks, and announced an additional grant of Rs 250 per quintal for paddy procurement. * New HC bench in Kolhapur: The cabinet approved a proposal for a circuit bench of the Bombay HC in Kolhapur. It will be sent to the Chief Justice.
