Amidst growing disquiet about a possible farm loan waiver in Andhra Pradesh, chief minister N Chandrababu Naidu has urged bankers to go ahead and reschedule loans for farmers, paving the way for fresh loans for the kharif season.

“As per existing RBI guidelines, accounts of farmers under 660 mandals can be straightaway converted into term loans and fresh crop loans can be sanctioned. So, in all cases of natural calamities, the principal amount and interest may be converted into term loan and repayable in 3-7 years with a moratorium of one year. This should be done at the earliest,” Naidu said.

Meanwhile, the expert committee appointed by the AP government, after the recent division of states, will submit in a month's time its preliminary recommendations. Banks have been facing deeper problems because of the anticipated farm loan waiver, which lead to massive non-repayment of loans by farmers.

“The need of the hour is bring clarity on the proposed debt waiver with due publicity. There is need to educate farmers on timely repayment and renewal of loans, explaining the benefits of crop insurance and interest subvention schemes, as subvention is related to timely repayments,” said C V R Rajendran, CMD of Andhra Bank and convenor of the state-level bankers’ committee. Last year, around 660 mandals of the state were affected by drought, cyclones and heavy rains.

“In the last couple of years, the scenario has changed, affecting both farmers and bankers in the state. The slippage in agri loans into NPAs is very high, resulting in higher provisioning affecting the credit rating of banks,” CVR Rajendran. The state announced a credit plan with a total outlay of Rs 91,459 crore for FY15, with an allotment of Rs 77,000 crore for priority sectors.

Source - http://www.mydigitalfc.com/