SBI chairman favours direct benefit transfer over farm loan waiver

'India is at the last leg of loan waiver as evident from recent developments'

State Bank of India Chairman Rajnish Kumar on Monday said the bank was in favour of direct benefit transfer (DBT) over farm loan waivers as it was more efficient in addressing farmers' concerns. 

He said the country was already seeing a movement towards DBT to farmers, as indicated by certain states in the recent past, along with such announcement in the interim Budget, last week. 

"India is in the last leg of loan waivers. Because, as a country, India can't afford to have both farm loan waivers and DBT to farmers. I am all for DBT," Kumar said. 

"We have seen announcements of DBT schemes in states such as Telangana and Odisha. The recent Budget also has such provisions. So, I feel, the phenomenon is catching up. This is a clear trend."

The interim Budget has provisions under which Rs 6,000 will be directly transferred to farmers' accounts in three tranches per year. This concept of DBT to farmers was first introduced by Telangana, in which the state promised to transfer Rs 4,000 to every farmer per acre of agricultural land each season, under its Rythu Bandhu scheme. Similarly, Odisha has announced to pay Rs 5,000 to every farmer per season as part of the Krushak Assistance for Livelihood and Income Augmentation (KALIA) scheme. 

While many Indian states have seen a spate of loan waiver announcements in the last few months, DBT is preferred for its efficacy in reaching out to real farmers. 

The SBI chairman, who was in Bengaluru to felicitate 20 young achievers under the age 20 as part of the bank's initiative to popularise its digital banking initiative 'YONO', also said the bank was likely to launch a dedicated marketplace for farmers, to be known as 'Yono Krishi' by April this year. 

"The whole ecosystem for farmers will be a part of this app. Farmers can get weather-related information to purchase of their inputs through this app. So, in a way, it will be marketplace," Kumar said. 

"Even we are planning to disburse agri loan products like agri gold loan, Kishan Credit Card (KCC) loan through this app," he said. 

The public sector lender, which has seen close to 50 per cent of its retail transactions being done on digital platforms, has witnessed around 17 million downloads of 'YONO' so far. "In January alone, we have disbursed close to Rs 1,100 crore of loan using this platform. Also, we have found out that the loans disbursed through YONO have low delinquency ratios," Kumar said. 

The SBI chairman also allayed concerns over any threat to customers' data after recent data leakage from 'SBI Quick'. "Wherever third-party is involved, we are making the security protocol tight and also reviewing the whole process," Kumar said.

Country's largest public sector lender, which has delivered strong third quarter numbers, is witnessing its domestic loan book growing at 16 per cent with most growth coming from retail loan segment. On the corporate loan book front, public-sector units were driving most of the loan demands, he added.

Meanwhile, the SBI chairman said that the Reserve Bank of India is likely to hold interest rates in its upcoming policy review as there is enough liquidity in the system. RBI will hold its bimonthly meeting of the monetary policy committee from February 5 to 7, which will be the first MPC meeting under new RBI Governor Shaktikanta Das.