Farmers, banks await clarity on Andhra Pradesh’s loan waiver scheme

Hyderabad: Even as the loan waiver scheme assured by AP Chief Minister N. Chandrababu Naidu to the farmers is awaited, lakhs of farmers will be declared as loan defaulters, said a higher official of public sector bank.

State Level Bankers Committee (SLBC) president and chairman and MD of Andhra Bank C.V.R. Rajendran said if the state government does not clarify on the scheme before the closure of balance sheets for the quarter (April-June), lakhs of farm loan accounts would be termed as non-performing assets (NPAs).

“There are lakhs of accounts which are becoming NPAs because of this problem,” said Mr Rajendran. As part of fulfilling poll promises, Mr Naidu initiated a process on the loan waiver and has set up a committee to work out the total amount to implement the scheme, a move estimated to cost the state exchequer thousands of crores.

In an SLBC meeting convened on Monday, Mr Rajendran said the current situation was hampering the performance of banks with crop loan disbursements during the ongoing kharif season coming to halt.

He said banks were unable to recover dues amounting to Rs 87,000 crore. Mr Naidu had said he is in touch with RBI Governor Raghuram Rajan and discussed the crop loan waiver issue in the backdrops that the central bank was opposing it and discussed the crop loan waiver issue in the backdrop of reports that the central bank was opposing it.

“We will have to make provision for (NPAs) unless the scheme is announced before the balance sheet is prepared,” he said. The banking industry body, Indian Bank’s Association(IBA), had earlier said it would oppose the farm loan waiver schemes announced by AP and Telangana governments saying that they will create “ill will” among the community.

Chief Minister Mr. Naidu had said he is in touch with RBI Governor Raghuram Rajan and discussed the crop loan waiver issue in the backdrop of reports that the central bank was opposing it.