’Farm loan waivers upset credit discipline’

16-03-2017
DH

 


Expressing reservations over farm loan waiver schemes, State Bank of India Chairman Arundhati Bhattacharya on Wednesday said such sops may disrupt credit discipline among borrowers.

Ahead of the recently concluded assembly elections in Uttar Pradesh, the BJP had promised to bring in a loan waiver scheme for farmers in the state, if its voted to power.

“We feel that in case of a (farm) loan waiver there is always a fall in credit discipline because the people who get the waiver have expectations of future waivers as well. As such future loans given often remain unpaid,” Arundhati said on the sidelines of an event organised by Confederation of Indian Industry here.

“Today the loans will come back as the government will pay for it but when we disburse loans again then the farmers will wait for the next election expecting another waiver,” she said.

The SBI chief said the bank has not received any proposal to waive off farm loans in Uttar Pradesh.

Arundhati said though it is important to support farmers but it has to be done in a way which does not disrupt credit discipline among them.

“When we are trying to ensure that the farmers do well it is important for us to make credit available to them so that they can leverage and do better and for that it is important to have credit discipline,” Arundhati said.

The country’s largest lender had recently announced a one time settlement (OTS) scheme worth Rs 6,000 crore in the tractors segment to speed up its recovery.

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