SBI's OTS scheme may have a ripple effect on NBFCs

Industry experts don't foresee a knee-jerk reaction from customers yet

A few days ago when State Bank of India (SBI) announced a one-time settlement (OTS) scheme for tractor and farm equipment loans, it signalled that instalment collections may take some time to recover. While investors in non-banking finance companies (NBFCs) haven’t encountered a similar situation over the past few years, there are concerns whether SBI was setting the stage for more of such leeway. Election promises and demands in states such as Uttar Pradesh and Maharashtra, which favoured farm loan waiver, also increases concerns. 

A senior executive of a private bank states that while a farm loan waiver looks unlikely