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65pc of 9.50 trn agri debt may be potentially waived:Nomura

Press Trust of India  |  Mumbai 

Amid the rash of loan waivers, Japanese brokerage Nomura today estimated over 65 per cent of the total Rs 9.50 lakh crore of agri debt may potentially get written-off.

"We estimate that 2/3rd of the agri debt of Rs 9.5 lakh crore is in states where a debt waiver has been announced or promised, or in states that will go to the polls in the next two years," it said in a note.

"With expectations of a waiver now increasing in other states, there is a possibility of agri stress increasing elsewhere, especially poll-bound states," it added.

It added that 85 per cent of it is with state-run banks, including the commercial lenders and the regional rural banks.

followed in announcing a debt waiver for the farmers, which is expected to drill a Rs 30,000 crore hole for the state exchequer, over the weekend.

While UP had announced a Rs 36,500 crore waiver for a select few farmers, is aiming to give a blanket one.

It can be noted that a massive agitation is underway in pockets of for similar relief.

The brokerage said the grain bowl of Punjab is also finalising its debt waiver scheme, while there are demands in and Tamil Nadu to extend debt waiver applicable to loans taken from co-operative banks to the commercial banks.

"While a debt waiver in the near term leads to relief in agri NPAs for banks in that state, we feel it sets the wrong precedent for future servicing, and impacts on credit behaviour in other states," the brokerage said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, June 13 2017. 21:42 IST