An official from Vijaya Bank, raised the issue that the Pavagada branch of the bank was financing loans of a large number of farmers in the region.

Trouble for Ktaka solar park Bank asks govt to persuade farmers to clear dues
news Solar Park Friday, March 01, 2019 - 16:38

The Karnataka government's land-leasing model implemented to develop the solar park in Pavagada taluk of Tumakuru district has come under scrutiny. This after it emerged that the farmers who leased the land for the project had earlier already mortgaged the same land as security for loans.

An official from Vijaya Bank, in a letter to the State Level Bankers Committee (SLBC), stated that the Pavagada branch of the bank was financing loans of a large number of farmers in the region. "Our Pavagada branch had been financing a large number of farmers in Vallur and Thirumani Gram Panchayats of Pavagada taluk in Tumakuru district for past several years," reads the letter.

According to the same official, farmers with loans amounting to more than Rs 16 crore have mortgaged lands in Pavagada as security. "Of the lands taken on lease, 874 farmers having loans amounting to Rs 16.52 crore and 11 farmers having agriculture term loans amounting to Rs 0.44 crore at our Pavagada branch mortgaged their lands to our bank as security for their loans prior to the corporation entering into lease agreements with the farmers," reads the letter.

Pavagada, like nine other taluks in Tumakuru, is currently classified as drought-hit by the Karnataka State Disaster Management Authority (KSDMA). The state government identified areas in the taluk as the ideal spot for generating solar power but faced resistance from farmers in the region who refused to give up their land.  

The state government struck a compromise with farmers in the region to take their lands on lease for 28 years instead of buying it from the farmers. The solar park is being built by leasing land for a price of Rs 21,000 per acre per year. It is touted as one of the biggest solar parks in the world.

Read: Towards an uncertain future: Why farmers are unhappy with Karnataka’s big bet on solar

After 25 years, the state government will decide whether to renew the existing land lease agreement or dismantle the panels, which will take up to three more years. The state government is now facing questions about its land-leasing agreement, which it wants to implement in other areas of the state for developmental projects. 

Venkatesh Pavagada, an activist with the Safai Karamchari Kavalu Samiti from Balasamudra village in Pavagada, reiterated that farmers in the region were forced to take loans from banks due to crop losses suffered after years of drought. "Due to lack of rain in the last decade, almost all farmers here had taken loans from banks. The farmers also refused to give their land to the state government for the construction of the solar park because many feel that without their land, they have nowhere to go. Eventually, the land was leased by the state government for a small price," he says. 

Officials at Vijaya Bank also pointed out that the lands were leased by the state government without obtaining 'no objection certificates' from the bank. This has meant that the bank is unable to review/renew these accounts resulting in huge additions of accounts to nonperforming asset (NPA).

The officials are now urging the SLBC and the state government, particularly the Karnataka Solar Power Development Corporation Limited (KSPDCL), an entity formed in 2015 that is tasked with developing the park, to discuss this issue in their next meeting. The officials want the corporation developing the park to persuade farmers to clear their dues with the bank. The SLBC has recommended the same to the government. 

Officials of the KSPDCL further said that banks should bring issues like this to their notice. “Initially, we did get such complaints and we asked those farmers to clear the dues first. The bank should bring this to our notice for us to act. And we are not purchasing land for us to obtain NOC from the bank,” KSPDCL chief executive officer G Bhimsha said speaking to Deccan Herald.

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