Amid majority of farmers stopping loan repayments, a Punjab government-appointed expert panel will meet bankers for the first time here on July 25 to seek suggestions on debt waiver. The meeting between the panel on loan waiver and bankers assumes significance as Congress led government was facing mounting pressure to implement the debt waiver, a key poll promise. The expert panel will meet representatives of several banks here in connection with the debt waiver issue, a senior official of the Punjab National Bank (PNB) said today. In the meeting, the panel is expected to seek suggestions from us regarding the implementation of debt waiver scheme of the state government, the official said.
He said that the government might also suggest ‘haircut’ for the resolution of farm debt. ‘Haircut’ in the context of loan recoveries means giving up a part of claims by banks on debt for its resolution. After coming to power, the state government had formed an expert group under the chairmanship of T Haque, a former chairman of the Commission for Agricultural Costs and Prices, to assess the quantum of agricultural debt and suggest ways and means for farm debt waiver. It will be for the first time that banks will hold a meeting with Haque since this panel was formed. An official said that Finance Minister Manpreet Badal may also join the meeting.
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Banks too have been asking the state government to act fast on the implementation of loan waiver in the wake of rising default by growers. They had already stopped fresh lending to growers who were making default in repayments. Recoveries plummeted by as much as 60 per cent in the state, an official said. Banks are concerned about the recovery of outstanding loan of Rs 36,000 crore of small and marginal farmers, which they think, is at stake. The Punjab government has proposed to own up Rs 9,500 crore as loan waiver which was to be settled with banks in 4 to 5 years time on the basis of interim report by the expert panel, according to officials.
As part of debt waiver plan, Punjab government had last month announced waiver of entire crop loans up to Rs 2 lakh for small and marginal farmers (up to 5 acres), and a flat Rs 2 lakh relief for all other marginal farmers, irrespective of their loan amount, which would benefit a total of 10.25 lakh farmers, including 8.75 lakh farmers with land up to 5 acres. Chief Minister Amarinder Singh had met Union Finance Minister Arun Jaitley in Delhi on July 20, seeking one-time settlement of the Rs 6,000 crore loans taken by the state’s farmers from the national and private banks. Such a settlement will benefit 4.5 lakh of the state’s beleaguered farmers.
Singh sought the minister’s intervention to convert the Rs 6,000 crore loan into term loan by giving requisite directions to the Reserve Bank of India (RBI). Of the total debt of small and marginal farmers waived by the state, Rs 3,600 crore relates to loan from cooperatives, with the remaining Rs 6,000 crore coming from banks. The Congress in its poll manifesto had promised waiving farm debt after coming to power. It had announced that it would ensure ‘karza-kurki khatam (eliminate loan and auction), fasal di poori rakam’ (complete payment of crops).