Farm loan waiver by UP CM prompts RBI Governor to keep repo rate unchanged

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Published: April 6, 2017 6:36:08 PM

In his first Cabinet meeting held on Tuesday, UP Chief Minister Yogi Adityanath took the decision of waiving off farmers' loans of up to Rs 1 lakh. Although this decision by the UP government was welcomed by almost everyone concerned, it has proved to be a big concern for RBI governor Urjit Patel who kept the repo rate unchanged in his monetary policy today.

Chief Minister Yogi Adityanath has waived off a loan amount of Rs 36,000 crore. With this step, the farmers of Uttar Pradesh are happy.

In his first Cabinet meeting held on Tuesday, UP Chief Minister Yogi Adityanath took the decision of waiving off farmers’ loans of up to Rs 1 lakh. Although this decision by the UP government was welcomed by almost everyone concerned, it has proved to be a big concern for RBI governor Urjit Patel who kept the repo rate unchanged in his monetary policy today.

Chief Minister Yogi Adityanath has waived off a loan amount of Rs 36,000 crore. With this step, the farmers of Uttar Pradesh are happy. However, on the other hand, RBI Governor Urjit Patel is quite unhappy with this move taken by the UP CM.

Apart from this, there are many other farmers who had taken a loan and have been currently turned into NPAs (non-performing asset’s). Many other state governments are also taking such initiatives as taken in the first Cabinet meet of Yogi and are urging the RBI Governor to get their farmers loans also waived off.

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Keeping this fact in mind that now almost everyone would want one’s loan to be waived off, the RBI decided to keep the repo rate unchanged in its first monetary policy of this financial year today.

The RBI stated that such kinds of decisions taken by a state government on the grounds of waving off loans and unnecessarily giving a heavy payout can reduce the credit worthiness of that state. The RBI Governor also said that with such steps, banks will be discouraged to further provide loans to the farmers.

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