Farmers in Virudhunagar are complaining that Cooperative societies were forcing farmers to pledge gold or farmland as collateral security for giving crop loans violating the Reserve Bank of India guidelines.
“While the RBI guidelines are clear that nationalised banks and cooperative societies should give collateral free crop loans up to to ₹2 lakh, the societies in Virudhunagar district were demanding either gold or farmlands as collateral security even for crop loans less than ₹2 lakh,” complained R. Ram Pandian, president of Cauvery Vaigai Kiruthumal Gundar Irrigation Farmers’ Federation.
A farmer from Kalkurichi who sought crop loan of ₹1.20 lakh was asked to give gold as collateral security, he alleged.
District president of Tamilaga Vivasayigal Sangam N. A. Ramachandra Raja alleged that not all societies, but some were insisting on collateral security.
Besides, the cooperative societies were also insisting on farmers to bring surety by a Class A member of cooperative society for the loan or to pledge the farmland.
“Not all farmers can get surety. Besides, those farmers having joint holding of farmland cannot get their farmlands pledged easily,” he said.
Moreover, the societies were also forcing the farmers to pay ₹6,000 share in the society for a crop loan of ₹1 lakh.
“The share deposited could be withdrawn only after one year for which no interest is paid. Besides, when the farmers try to withdraw the share amount, the officials make the farmers to give in writing that they would seek crop loan for the next few years,” he said.
He complained that such practices were putting the farmers in a lurch.
“These practices raise a suspicion whether the State Government was indirectly helping the corporates which were on land buying spree to set up solar power plants. If this plight continued for farmers, the cooperative societies will face closure,” he warned.
The societies were also forcing the farmers to buy ‘unwanted’ fertilizers, when the farmers want buy urea.
However, a senior official from the Department of Cooperatives denied the charges and clarified that collateral security was insisted only for the crop loans above ₹2 lakh as per the guidelines.
“The societies cannot give fresh crop loans, if they have already achieved the cash credit targets fixed by the District Central Cooperative Bank,” he added.
Published – January 02, 2026 06:41 pm IST
