The Reserve Bank of India (RBI) is yet to give its approval for rescheduling of crop loans as per the political promises made by the Telangana and Andhra Pradesh governments.
While the crop loan waiver issue has led to confusion among bankers and farmers, RBI is awaiting more details on the waiver issue from both the governments. Bankers feel that in the wake of the current situation without any clarity, the performance of banks for crop loan disbursements might get affected in this ongoing kharif season.
Talking to media on the sidelines of FINSEC-2014, a financial sector conclave, organised by FICCI, RBI deputy governor R Gandhi said initial discussions had taken place between the central bank and the two state governments.
“We have asked both the governments to come back with full details of the proposed rescheduling of crop loans and are awaiting their responses,” he said. "We have given them standing guidelines as to how to deal in the event of national calamities or disasters," he added.
However, the chief ministers and finance minister of Andhra Pradesh had, on separate occasions, indicated that the RBI had informally cleared the crop loan rescheduling scheme. They had told that the details of rescheduling of crop loans, terms of repayment over five or seven years and other details would be known once the RBI’s sanction letter is sent. The early decision on crop loan reschedulement would facilitate farmers to avail kharif loans from all banks, say government officials.
The banks had lent a total of R1,37,176.59 crore to the agriculture sector in the united state out of which residual Andhra Pradesh accounts for R87,612.25 crore and the remaining R49,564.34 crore advances were made in Telangana. These loans include crop loans, term loans and loans taken for the allied activities.
Bankers are cautious about the proposed loan waiver in Telangana and the residual state of Andhra Pradesh as it may affect the credit discipline. According to the latest State Level Banker's Committee (SLBC) report, the total outstanding balance in overdue accounts is R29,636 crore which is 21.6% and NPA is 3.6% to total outstandings and in real terms it is R4,941 crore for the total agriculture sector. In fact, SLBC has been requesting the government to help banks in recovery of chronic dues in the farm sector.