Banks want AP to invoke Revenue Recovery Act

Bankers in the state requested the state government on Monday to invoke the Revenue Recovery Act for the agriculture and allied sector to improve the loan recovery position in rural areas. The State Level Bankers Committee (SLBC) said the RR Act was being implemented in similar instances by states like Bihar, Karnataka and Uttar Pradesh.

The Act allows recovery of loan by auctioning the properties of the defaulter.

The overdue position in loan outstandings or the potential non performing assets (NPAs) is steadily rising in AP, especially in the agriculture sector.

The potential NPAs or the balance in overdue accounts in the state has shot up to 42.26 per cent in the case of short-term crop loans and 30 per cent in the case of agriculture term loans from 24.53 per cent and 19.09 per cent respectively just three months ago.

 

In absolute terms, the potential NPAs in the agriculture sector stood at Rs 13,622.40 crore, which is 17.93 per cent of the total agriculture advances, while the NPAs are at 5.51 per cent to the total outstandings as on Sept, 2011.

Recovery is unlikely to improve as the statehad already announced three-fourths of the total mandals as drought-affected allowing reschedulement in repayment of agriculture loans.

R Ramachandran, CMD of Andhra Bank, who is president of SLBC, said: “You may recollect that banks have rescheduled crop loans of borrowers in the natural calamity affected mandals during the last two years and this is the third year of calamity. Consecutively, in many cases, the debt burden of farmers has increased enormously and this is a cause for concern.”