Letters to the editor: Farm loans

Jun 10 2014, 01:06 IST
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SummaryThis refers to the editorial “Poor Harvest” (FE, June 6).

This refers to the editorial “Poor Harvest” (FE, June 6). One can argue for farm loan waivers on the grounds that there are borrowers like Kingfisher whose bad loans cost the banks R8000 crore and numerous employees their salaries whereas by offering a R12,000 crore loan waiver, 23 lakh farmers in just one state are benefited. Ironically, in both the cases, mostly PSU banks have borne the burden of the NPAs since agile private banks exited their exposure in Kingfisher in time and lent substantially low volumes to the agriculture sector. Whatever the private banks have lent to the agri sector, the farm loan waiver can not be enforced on them. It can now be established that if PSU banks remain state-owned, they have to face more such farm loan waivers in one or other way. In such a case, why not keep agriculture sector loans out of the banks’ listing of assets since anyway farm loans repayment are becoming distant reality day-by-day? After all, you have rightly pointed out in the edit that while state-owned banks will probably have no option but to accept the waivers, there is a larger issue that the central government needs to keep in mind, that of the impact this has on the overall NPAs of banks

Ravi Kant, Mumbai

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