Lakhs of farmers in Andhra Pradesh may be declared loan defaulters while guidelines are awaited for a loan waiver scheme promised by Chief Minister N Chandrababu Naidu during the election campaign, a top official of a public sector bank has said.
State Level Bankers Committee (SLBC) President and Chairman and Managing Director of Andhra Bank C V R Rajendran said if the state government does not come out with clarity on the scheme before the closing of the balance sheets for the quarter (April-June quarter), lakhs of farm loan accounts would slip into non-performing assets which would force the banks to make higher provisioning.
“There are lakhs of accounts which are becoming NPAs because of this problem. Already they are defaulted. This quarter itself we (member banks in SLBC) are accounting big NPAs (on account of farm loans),” Rajendran told PTI.
As part of fulfiling poll promises, Andhra Pradesh Chief Minister N Chandrababu Naidu initiated a process on the loan waiver and has set up a committee to work out the total amount and modalities to implement the scheme, a move estimated to cost the state exchequer thousands of crores.
In the SLBC meeting convened yesterday, Rajendran said the current imbroglio was hampering the performance of banks with crop loan disbursements during the ongoing kharif season coming to a halt.
He said banks were unable to recover dues amounting to a staggering Rs 87,000 crore.
The Andhra Bank CMD expressed fear that the situation may force banks to make higher provisioning for the defaulted accounts.
“We will have to make big provisions (for NPAs) unless the scheme is announced before the balance sheet is prepared,” he said.
The banking industry body Indian Banks’ Association (IBA) had earlier said it would oppose the farm loan waiver schemes announced Andhra Pradesh and Telangana Governments saying that they will create “ill will” among the community.
Chief Minister Naidu had said he is in touch with RBI Governor Raghuram Rajan and discussed the crop loan waiver issue in the backdrop of reports that the central bank was opposing it.