(MENAFN- Khaleej Times) Andhra pradesh chief minister n chandrababu naidus ambitious pre-poll promise of waiver of loans availed by farmers and self-help groups (shgs) hit a major roadblock when bankers refused to yield to his request for rescheduling of crop loans
Naidu’s hard push with the bankers to find a way out of the financial mess arising out of the loan waiver scheme was based on the argument that the reserve bank of india (rbi) rules allowed rescheduling of such loans under the cyclone and drought clauses.The chief minister at a meeting with the state level bankers committee (slbc) on monday not only sought rescheduling of crop loans to seven years with a moratorium of one year but also pleaded that fresh loans for the kharif season be disbursed immediately to the farmers. the bankers however rejected both the proposals though naidu pointed out that 113 of the 661 mandals in seemandhra were affected by drought while another 462 mandals by cyclones and heavy rains last year.The residuary state which began with a revenue deficit of rs150 billion is caught in a financial trap with the farmers’ and shgs’ loan waiver scheme alone requiring an estimated rs550 billion for implementation. the chief minister has also sought the national democratic alliance (nda) government’s support to bail out the state government.The bankers expressed their helplessness to naidu pointing out that the reports on drought and cyclone affected mandals should have been submitted within 90 days of the government declaring it. the administration had however failed to do so and as such the banks are not in a position to comply with the request for rescheduling of loans they said. the chief minister’s plea that they should set aside technicalities since the reports could not be submitted following the agitations engulfing the two regions of united andhra pradesh the governor’s rule general elections and finally the bifurcation of the state failed to convince the bankers. the slbc made it clear to naidu that unless the rbi issued specific directions the rescheduling of loans can’t be taken up by the banks. the desperate chief minister however persisted stating that the state government would come out with a blueprint on how the rescheduled loans would be repaid.Naidu also urged the bankers not to pressurise the farmers to repay their loans since they were already in a tight spot financially. “farmers are waiting for the monsoon to arrive to commence agriculture operations and they need fresh loans” he said and told the bankers that he had taken the decision on waiver of loans only after seeing their sorry state of affairs.“farmers had reached the stage where they were ready to commit suicide and the loan waiver promise is only to help farmers suffering from untimely rains and lack of remunerative prices and is not intended to inconvenience bankers” he said.Slbc president and chairman and managing director of andhra bank c v r rajendran said crop loan disbursements for the current season had almost come to a halt as banks were unable to recycle the funds following non-repayment of loans and mounting over dues.Pointing out that farm loans in the state stood at rs860 billion as of march 2014 he said the slippages of april loans into npas are on a very high side resulting in higher provisioning ultimately affecting the credit rating of the banks.Rajendran said: “the need of the hour is to bring clarity on the proposed debt waiver with due publicity. i also request the government to put in place an effective and undisputable recovery mechanism which can tackle the issue effectively.”
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