RBI skips questions on waivers

Mumbai: With farm loan waiver becoming a raging political issue in few states with major political parties making it one of their major poll agendas in the recently concluded state assembly elections, the RBI on Thursday refused to spell out its stand on the matter.

While interacting with reporters on the sidelines of an event, S.S. Mundra, deputy governor of RBI said making any general statement on the matter will not be appropriate and added that the central bank has not received any communication from the government on the same.

Last week, SBI chairperson Arundhati Bhattacharya said that farm loan waiver would disturb the credit discipline of borrowers.

Stating that there are restructuring schemes, which are implemented in case of credit for large borrowers, Mr Mundra said, “I think what is more important is to understand the component and where there is a need and if there is a need, what kind of design could be there which can meet the concern of all the requirements”.

However, he reminded that the RBI traditionally had concerns regarding farm loan waiver due to its impact on credit discipline.

The BJP, which registered an impressive win in Uttar Pradesh and the Congress Party, which swept to power in Punjab, had promised waiver of farm loans in their respective election manifestos. The opposition Congress Party and the Nationalist Congress Party (NCP) in Maharashtra has also made a similar demand.  

Raghuram Rajan, the former governor of RBI had publicly voiced his concern against such populist measures when a similar demand was raised in 2014.