Farm loan waiver a moral hazard: NABARD chief

Says it should be the last step taken

April 12, 2017 12:17 am | Updated 12:17 am IST

Mumbai: Joining the chorus of top bankers in the country who have spoken against farm loan waivers, National Bank for Agriculture and Rural Development (NABARD) chairman Dr. Harsh Bhanwala said on Tuesday that any such move would be a ‘moral hazard’ if implemented.

“We are against the absolute loan waiver extended to farmers. Banks must get their money, which they have given to farmers in the form of loans, back. Long term loans should increase in the farm sector, which will further help increase employment. Extending a blanket loan waiver to farmers will pose a moral hazard before us,” Dr. Bhanwala said during a press conference here.

Dr. Bhanwala said waiving a loan should be the last step taken. “NABARD had successfully implemented the 2008 farm loan waiver. Every State has a different model for farm loan waivers, and every government should analyse the State’s financial position and decide on whether to go ahead with the move,” he added.

Having started as a pure refinance provider, NABARD works on rural infrastructure, financial inclusion, women empowerment, climate-proofing of agriculture, and strengthening rural financial institutions.

Earlier, Reserve Bank of India governor Dr. Urjit Patel and State Bank of India chairman Arundhati Bhattacharya had also spoken against farm loan waivers. The Congress had moved a privilege motion against Ms. Bhattacharya in the State legislature, saying that her comments undermined the supremacy of legislature.

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