No proposal on Uttar Pradesh farm loan waiver yet, says SBI Chairman Arundhati Bhattacharya

MUMBAI: The chief of India's largest bank State Bank of India once again spoke out against farm loan waiver amid talk that the ruling BJP government may soon deliver on its poll promise made in the Uttar Pradesh assembly elections.

SBI Chairman Arundhati Bhattacharya today said that farm loan waivers potentially disturbed credit discipline and raised hope of multiple future waivers.

"Nothing has come till now (UP Loan waiver proposal), we feel that in case of a loan waiver there is always a fall in credit discipline because the people who get the waiver have expectations of future waivers as well," Bhattacharya said on the sidelines of an event organised by the Confederation of Indian Industry (CII). "Today the loans will come back because the government will pay for it but when we disburse loans again then the farmers will wait for the next election expecting another waiver. As such future loans given often remain unpaid."

SBI Chief also added that it was important to guarantee that while farmers were supported it was done without disrupting credit discipline.

"When we are trying to ensure that the farmers do well it is important for us to make credit available to them so that they can leverage and do better and for that it is important to have credit discipline." Bhattacharya said.

The bank also recently announced one-time settlement schemes for loans unpaid in SME, education, tractor and farm mechanisation loans, to improve recovery in these sectors.

Loans worth Rs 6,000 crore in the tractor and farm mechanisation segment would be eligible for the one-time scheme. The bank is expected to write-off 40% of the outstanding principal amount of the loan under the scheme.

State Bank of India