Loans of farmers in Andhra Pradesh, Telangana unlikely to be restructured

Aug 06 2014, 02:01 IST
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SummaryThe Reserve Bank of India (RBI) said on Tuesday there did not appear to be a case, prima facie, for restructuring loans in Andhra Pradesh and Telengana. “It doesn’t look like any of the districts has met the 50% criteria,” RBI governor Raghuram Rajan said referring to the yield on the crops.

The Reserve Bank of India (RBI) said on Tuesday there did not appear to be a case, prima facie, for restructuring loans in Andhra Pradesh and Telengana. “It doesn’t look like any of the districts has met the 50% criteria,” RBI governor Raghuram Rajan said referring to the yield on the crops.

Rajan added the central bank was in discussions with the state governments to see if there is a case for farm loan waivers.

Rajan explained that as a rule of thumb, if the agriculture yields fall below 50% of the target, the district collector can declare a state of emergency which could also trigger a possibility of loan restructuring.

“Now in Andhra Pradesh and Telangana, because of a variety of factors, no such emergency was declared and no requests for restructurings were made. We have asked for these numbers and are looking at them".

Andhra Pradesh chief minister Chandrababu Naidu announced his government would waive close to R40,000 crore of loans at R1.5 lakh per farming family and R1 lakh per self-help group as part of the election promises. He said the government would raise the money needed through sale of seized Red Sanders wood, among other means. The Telangana Rashtra Samithi had also promised a similar loan waiver, with a cap of R1 lakh for a family.

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