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Expressing reservations over farm loan waiver schemes, State Bank of India Chairman Arundhati Bhattacharya on Wednesday said such sops may disrupt credit discipline among borrowers.
Ahead of the recently concluded Assembly elections in Uttar Pradesh, the BJP had promised to bring in a loan waiver scheme for farmers in the State, if voted to power. “We feel that in case of a (farm) loan waiver there is always a fall in credit discipline because the people who get the waiver have expectations of future waivers as well. As such future loans given often remain unpaid,” Bhattacharya said on the sidelines of an event organised by CII here.
“Today, the loans will come back as the government will pay for it but when we disburse loans again then the farmers will wait for the next elections expecting another waiver.”
She said the bank has not received any proposal to waive off farm loans in Uttar Pradesh.
Bhattacharya said though it is important to support farmers, it has to be done in a way which does not disrupt credit discipline among them.
The country’s largest lender had recently announced a one-time settlement (OTS) scheme worth ₹6,000 crore in the tractors segment to speed up its recovery. The bank has also announced such OTS scheme in education and SME segments.
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