Bankers in private admit that the government?s loan waivers to farmers could nurse a wrong credit culture in rural India especially when the government is trying to include as many into the financial fold.
Farmers are finding out ways to get the benefit of the waiver scheme by converting large tracts of land into smaller pieces, they say. “The debt waiver programme has created land fragmentation. Several farmers have started fragmenting their land as they feel they would be more benefited by the scheme,” said PV Ananthakrishnan, executive vice-president and country head of capital markets & commodity business group with HDFC Bank.
Kumar Ashish, general manager with ICICI Bank feels such loan waivers should be strictly discouraged as it could damage the credit culture in rural areas.
“There should be no interest waiver and loan write offs,” they both opined.Ananthakrishnan also stressed on a strong case for commercial and co-operative banks to come together. “While we have the technology and capital, we are not able to reach the poor. The co-operative banks have been there and know the region better than we do,” he said. Ananthakrishnan was speaking on the sidelines of a conference on agriculture organised by Bombay Chamber of Commerce and Industry.
Ananthakrishnan also stressed on having a public private partnership model.
“Huge investments are needed for agriculture marketing and rural infrastructure. We can develop this model of private sector banks pumping more money and public sector banks acting as facilitators as they are already present in those areas. PPP can ensure in efficient resource utilisation and better management of operations,” said Ananthakrishnan.