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Banks to meet expert panel on farm loan waiver on July 25

Meeting assumes significance as pressure mounts on Congress-led govt to write off loans

Press Trust of India  |  Chandigarh 

Farmers

Amid majority of stopping loan repayments, a government-appointed expert panel will meet bankers for the first time here on July 25 to seek suggestions on debt waiver.

The meeting between the panel on and bankers assumes significance as the Congress-led government has been facing mounting pressure to implement the debt waiver, a key poll promise.


The expert panel will meet representatives of several banks here in connection with the debt waiver issue, a senior official of the National Bank (PNB) said today.

In the meeting, the panel is expected to seek suggestions from us regarding the implementation of debt waiver scheme of the state government, the official said.

He said that the government might also suggest 'haircut' for the resolution of farm debt. 'Haircut' in the context of loan recoveries means giving up a part of claims by banks on debt for its resolution.

After coming to power, the state government had formed an expert group under the chairmanship of T Haque, a former chairman of the Commission for Agricultural Costs and Prices (CACP), to assess the quantum of agricultural debt and suggest ways and means for farm debt waiver.

It will be for the first time that banks will hold a meeting with Haque since this panel was formed.

An official said that Finance Minister may also join the meeting.

Banks too have been asking the state government to act fast on the implementation of in the wake of rising default by growers. They had already stopped fresh lending to growers who were making default in repayments. Recoveries plummeted by as much as 60 per cent in the state, an official said.

Banks are concerned about the recovery of outstanding loan of Rs 36,000 crore of small and marginal farmers, which they think, is at stake.

The government has proposed to own up Rs 9,500 crore as which was to be settled with banks in 4 to 5 years time on the basis of interim report by the expert panel, according to officials.

As part of debt waiver plan, government had last month announced waiver of entire crop loans up to Rs 2 lakh for small and marginal (up to 5 acres), and a flat Rs 2 lakh relief for all other marginal farmers, irrespective of their loan amount, which would benefit a total of 10.25 lakh farmers, including 8.75 lakh with land up to 5 acres.

Chief Minister had met Union Finance Minister in Delhi on July 20, seeking one-time settlement of the Rs 6,000 crore loans taken by the state's from the national and private banks.

Such a settlement will benefit 4.5 lakh of the state's beleaguered

Singh sought the minister's intervention to convert the Rs 6,000 crore loan into term loan by giving requisite directions to the Reserve Bank of India (RBI).

Of the total debt of small and marginal waived by the state, Rs 3,600 crore relates to loan from cooperatives, with the remaining Rs 6,000 crore coming from banks.

The in its poll manifesto had promised waiving farm debt after coming to power. It had announced that it would ensure 'karza-kurki khatam (eliminate loan and auction), fasal di poori rakam' (complete payment of crops).

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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