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LATEST NEWS UPDATES | Banks Finally Give ‘Debt Relief’ to AP Government

Banks Finally Give ‘Debt Relief’ to AP Government

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published Published on Oct 2, 2014   modified Modified on Oct 2, 2014
-The New Indian Express

 

HYDERABAD: In a much-awaited relief to the cash-starved Andhra Pradesh government, the State Level Bankers' Committee (SLBC) on Tuesday reportedly agreed to accept its offer of upfront payment of 20 per cent outstanding crop loans of eligible farmers.

The SLBC has constituted a sub-committee to look into proposals made by the Andhra Pradesh government on the modalities of crop loan waiver scheme and after a thorough discussion, finally conveyed its nod this evening.

The AP government had on September 29 offered to pay `5000-7000 crore of the total outstanding crop loans to banks through the proposed Farmers' Empowerment Corporation. Now, with the bankers giving the green signal, farmers can apply for fresh loans.

Finance Minister Yanamala Ramakrishnudu said the SLBC decision would be discussed at Wednesday's cabinet meeting and a final decision taken on the loan waiver scheme. He said it was not a waiver and the whole commitment of the government was aimed at providing debt relief to farmers.

Earlier, at the SLBC meeting, the AP government told the banks it was only asking for "restructuring and rescheduling to clear outstanding crop loans in an incremental way in four-five years."

However, the bankers asked it to put in place revenue recovery system with regard to the agriculture sector. The farmers were continuing to demonstrate their reluctance to repay crop loans and other agricultural term loans following the debt waiver scheme announced by the government, complained Andhra Bank executive director SK Kalra.

"Reluctance was observed even in case of high value loan accounts and from term loan borrowers," he said.

He said since the government was contemplating payment of 20 per cent of the eligible amount as immediate relief to the farmers, the need of the hour was to educate them on timely repayment and renewal of loans, he suggested.

"The bankers strongly believe agriculture should be a profitable business and farmers should not be made to look at waivers. Instead, they may be provided with necessary inputs, forward and backward linkages, to make agriculture profitable," he asserted.

He asked the AP government to set up a second Debts Recovery Tribunal to speed up recovery process in high volume loans and clear pending cases. "The banks will not come into the picture either in the government's debt waiver scheme or in the issuance of bonds as both measures are a matter between the government and the farmer," said a senior bank official.

While expressing displeasure over disbursal of kharif loans, the Finance Minister said as per the data available with the government, disbursal of kharif loans stood at 38 per cent of the target in the first quarter which is the lowest ever.

He said the proposed corporation would repay existing loans of farmers to the banks and ensure that the credit line remains open.

Meanwhile, the SLBC has urged insurance companies to extend crop insurance for kharif season till October 31. SLBC convenor C Doraswamy said as the kharif season was delayed for one month due to delayed monsoon, the companies should extend the deadline for one more month. However, insurance companies rejected their request.

AP Agriculture Minister P Pulla Rao, Chief Secretary IYR Krishna Rao, Union Finance Director N Srinivas Rao, RBI regional director KR Das and NABARD chief general manager Jiji Memman were present.


The New Indian Express, 1 October, 2014, http://www.newindianexpress.com/states/andhra_pradesh/Banks-Finally-Give-%E2%80%98Debt-Relief%E2%80%99-to-AP-Government/2014/10/01/article2457549.ece


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