The efforts of Telangana Government to convince the Reserve Bank of India on loan waiver scheme reportedly drew a blank with the apex bank firm that such schemes will affect the credit repayment discipline of the borrowers and adversely impact the liquidity of the banks.
A team of Finance Department officials led by Chief Secretary Rajeev Sharma in a meeting with RBI officials at Mumbai on Friday was non committal on giving an assurance on their request for rescheduling of crop loans of last Kharif and Rabi.
The RBI officials explained once again why they could not entertain loan waiver schemes as it would impact the financial health of the banks. Several bankers expressed concern over the reluctance of the farmers in repayment and renewal of crop loans and agricultural term loans anticipating a debt waiver. As a result, it was mentioned in the recent State level bankers committee meeting that banks were unable to recycle the funds owing to non-repayment of loans and mounting over dues.
Telangana officials, according to sources, explained that the outstanding loans as on March 31 stood at Rs.17,000 crore. But with the RBI ruling out loan waiver, they urged the apex bank to give some leeway by rescheduling crop loans to the tune of Rs.9,000 crore keeping in view crop damaged in 337 mandals due to Phailin cyclone in October 2013.
The rescheduling of crop loans, they said, would give a breather to the State and the farmers with a moratorium on repayment for first year and repayment of loan over a period of four to seven years.
The expert committee on loan waiver appointed by Andhra Pradesh Government also had represented to the RBI for its clearance for the loan waiver in vain. The AP Government was also now pinning its hopes for RBI’s clearance for rescheduling of crop loans in drought and cyclone affected 575 mandals.
Among others Principal Secretary V.Nagi Reddy, special secretary K. Ramakrishna Rao and advisor to the Government G. R. Reddy attended the meeting.