The Kerala High Court observed that the credit rating of farmers who effectively sell their paddy to the government under the Paddy Procurement [or Paddy Receipt Sheet (PRS)] Scheme could never be affected, as the court had already held that they could not be construed to be borrowers by any bank.
The court also held that the banks cannot insist on any security document being executed by the farmers, nor could they impose on them any condition akin to a borrower.
The court reiterated that farmers could not be treated as borrowers by any bank. It was only because the government required time to make payment against it that the farmers were forced to avail themselves of such schemes.
