Loan waivers by states likely to affect credit offtake in farm lending

For the last 2 years, credit growth in the agri sector has been lacklustre; in fact much lower than the previous years

Banks are bracing themselves for more stress in the agriculture sector in coming quarters on account of farm loan waivers by various state governments.

This might impact credit offtake in farm lending, which is witnessing a slowdown due to write-offs.

According to the Reserve Bank of India (RBI) data, for the last two years, credit growth in the agricultural sector has been lacklustre, and much lower than what it was in the previous years. Between April 2017 and now, various state governments have announced farm loan waivers, and after that agriculture credit growth nosedived, the data from the RBI shows.

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