State Bank of India has announced one-time settlement (OTS) schemes for tractor loans worth R6,000 crore, managing director Rajnish Kumar said.
State Bank of India (SBI) has announced one-time settlement (OTS) schemes for tractor loans worth R6,000 crore, managing director Rajnish Kumar said on Tuesday. Speaking to a television channel, Kumar said accounts falling under the categories of doubtful or loss-making assets for loans disbursed before September 30, 2011 will be eligible for the OTS scheme. “We are saying that other agri loans, like KCC (Kisan Credit Card) and other term loans of the same tractor and farm loan accounts, may also be covered under the same concession,” Kumar said, adding that SBI is ready to take a haircut of 40% of the outstanding balance as on September 30, 2016. A circular to this effect was issued on February 2, 2017 to the bank’s branches. The window for receiving applications under this scheme will be open till March 31.
Earlier, SBI had also notified OTS schemes for SME and education loans in December. The cut-off date for receiving applications under these schemes is March 20. Kumar said that the determination of eligibility for OTS schemes was driven by adherence to specific parameters. “OTS sometimes gives us a better recovery and the purpose of formulating the scheme is that the key element is that it is non-discretionary and is parameter-driven and follows a tick-boxes route,” Kumar said. “If all the boxes our branch manager (BM) would tick at his level, then he can approve. So, the delegation of power is right up to the BM level.”
Kumar said SBI’s total agriculture loan book stood at Rs 1,25,000 crore, of which around Rs 10,000-12,000 crore would constitute its exposure to Uttar Pradesh, which had seen political parties announcing farm loan waivers in the run-up to the assembly elections.
He said relaxation of loan repayment conditions in the run-up to elections have become frequent of late and they have a negative impact on repayment behaviour. “What it does is, in our view, it vitiates the repayment culture. That is the negative aspect of it. From the bank’s perspective, if the government makes good and your recovery improves temporarily for that particular loan, you are not worse off,” Kumar said.