A former RBI Governor had flagged the risk of promising loan waivers by political parties during poll campaign to the Election Commission of India (ECI) and had noted that the beneficiaries stopped making payments even if they were in a financial position to repay loans, uNION Finance Minister Arun Jaitley said on Friday.
Mr. Jaitley told the Lok Sabha in a written reply during question hour that the former RBI chief had written to the Chief Election Commissioner mentioning “the risk of promising loan waivers by political parties at election time, as beneficiaries stop making payment even if they are financially in a position to make them and that this affects the banking sector as well as the state finances.”
The Minister neither named the former RBI Governor nor the date of the letter. The former RBI Governor, while addressing a conference organised jointly by NABARD and SIDBI, had also stated that loan waivers and subsidies “distort the credit discipline,” Mr. Jaitley said.
Responding to supplementaries, Mr. Jaitley said in a democracy, various views keep emerging on issues.
