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  Metros   Mumbai  02 Dec 2017  Banks asked to share farm loan waiver burden

Banks asked to share farm loan waiver burden

THE ASIAN AGE. | UMAKANT DESHPANDE
Published : Dec 2, 2017, 2:35 am IST
Updated : Dec 2, 2017, 2:35 am IST

The state government has declared a loan waiver and incentive scheme for farmers who have been paying loans regularly.

The state government had declared a loan waiver and incentive scheme for farmers.
 The state government had declared a loan waiver and incentive scheme for farmers.

Mumbai: The state government has asked all banks to share the financial burden of non-performing asset (NPA) accounts or bad loans of farmers. Around 13.88 lakh farmers owe loan arrears worth Rs 12 thousand 629 crore deemed as NPA/bad loans to banks.

Highly placed sources from the cooperation department told The Asian Age, "Banks are ready and positive, but we are waiting for their written consent from SLBC (State level bankers' committee) and the waiver decision for these farmers has been put on hold."

The state government has declared a loan waiver and incentive scheme for farmers who have been paying loans regularly. This is expected to place a financial burden of over Rs 30,000 crore on the state exchequer. Of this, the state government has made financial provision for Rs 20,000 crore which will be raised through loans while the rest is expected to be shared by banks. It is binding on banks to make provision for NPA as per Reserve Bank of India (RBI) rules. The state government is paying for bad loans as well even though its financial condition is poor. So, it has sent a fresh proposal to banks to share the loan waiver burden.

A senior officer revealed that various options have been sent to banks for sharing as per the period of loan disbursement. The government is expecting that banks will take up a burden of 35 to 50 per cent of NPA loans. This will provide relief of Rs 4,000 to Rs 6,000 crore to the state government. In the last meeting, the CM told banks about the same and they agreed in principle. However, each bank will take a decision in its board of directors meeting and communicate the same to the government. With more than 63 bankers being members of SLBC, it will take at least a month for decisions of all banks to be communicated to the government. Hence, the waiver of these 13.88 lakh farmers has been put on hold, sources clarified.

Tags: farm loan waiver, npa loans