The Kisan Credit Card (KCC) is the largest government assistance for farmers in the country, providing low-interest loans for seeds, fertilizers, irrigation, and other farming needs. But what if a farmer is unable to repay this loan for some reason? Can the bank auction its land? The definitive answer is yes, but this is the last resort. Farmers must understand their legal rights and the entire auction process.
What is the Kisan Credit Card (KCC)?
The Kisan Credit Card Scheme was launched in 1998 to free farmers from the dependence on moneylenders and enable them to obtain low-interest loans directly from banks. Under this scheme, farmers can avail easy loans ranging from ₹50,000 to ₹3 lakh, which can be increased depending on the land and their needs. The loan repayment period depends on the crop cycle (Rabi or Kharif) and typically ranges from 6 months to 1 year. If a farmer repays the loan on time, they receive a significant discount of 2% to 3% on the interest rate (e.g., a loan of 7% can be obtained at 4%).
Procedure for Loan Non-Repayment
If a farmer fails to repay the loan on time, the bank first sends several reminders and notices. If payments are not made for 90 consecutive days, the bank declares the account as an NPA (non-performing asset). The bank then initiates recovery proceedings, which may include negotiation attempts, legal notices, and ultimately, land seizure.
When and how is land auctioned
The land auction process begins with a recovery notice from the bank or cooperative society.
Administrative Action and the SARFAESI Act
If payment remains unpaid despite notices, the bank refers the matter to the Tehsildar or district administration. The Tehsildar considers this amount as “revenue arrears” and initiates recovery proceedings. If the situation does not improve, the administration seizes the land. If the money remains unpaid despite all efforts by the bank and the administration, the bank has the right to auction the land. This entire process is governed by the SARFAESI Act, 2002. Under this powerful law, banks can sell mortgaged land even without court permission.
Auction Process
The bank sets an auction date and publishes a notice in newspapers.
The farmer is given a final opportunity to pay.
If payment is not made, the bank auctions the land.
The loan is repaid from the auction proceeds, and the remaining amount is returned to the farmer.
How to Avoid Auctions
Gratuity is a kind of ‘thank you gift’ that companies give to their employees for their long-term and loyal service. It is usually given only after completing at least 5 years of service, with the primary purpose of providing financial security to the employee.
When can land not be auctioned
Under certain circumstances, a farmer’s land cannot be auctioned, even if they haven’t repaid their loan:
If the crop has been destroyed due to floods, drought, or a natural disaster.
If the government has announced a loan waiver or relief package.
If the farmer is small or marginal and owns less than 5 acres of land.
If the loan was covered under a crop insurance scheme, and the insurance amount is still pending.
Farmer’s Legal Options
Even in the event of an auction, a farmer has several options. They can negotiate with the bank about restructuring the loan or opt for a one-time settlement. If the bank has not followed the rules, the farmer can appeal to the Debt Recovery Tribunal (DRT) or the court. The auction can be temporarily stopped by obtaining a stay order from the court.
An auction is a last resort
It is a powerful truth that land can be auctioned for non-payment of a Kisan Credit Card loan, but this is not the first step, but the last resort. The bank first makes every effort to recover and reach a settlement. If the farmer maintains dialogue with the bank from the beginning, he can avoid the auction by increasing the loan installments or joining a new scheme. Most importantly, if there is a problem with loan repayment, do not remain silent; talk to the bank. Only timely communication and resolution can help the farmer save his land.
The post KCC Loan: Know When the Bank Can Seize or Auction Your Land, Detail Inside appeared first on Times Bull.
from Times Bull https://ift.tt/6eldzM2
0 Comments