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HomeEnglishStates will have to bear farm loan waivers from own coffers: Jaitley.

States will have to bear farm loan waivers from own coffers: Jaitley.

States will have to bear farm loan waivers from own coffers: Jaitley.

Johnson Cherian.
Finance minister Arun Jaitley on Monday said the States going in for farm loan waivers will have to generate funds from their own resources.
His comments came after a meeting he held with public sector bank (PSB) chiefs, where among other things, the situation on bad loans was discussed. Mr. Jaitley’s comments come in the backdrop of farmers’ agitations across the country as well as state governments such as Maharashtra and Uttar Pradesh – both BJP-ruled – announcing farm loan waivers. There are also similar demands for farm loan waiver in states including Madhya Pradesh and Haryana (both BJP-ruled), Punjab (Congress-ruled), Tamil Nadu (AIADMK government).
This is the second time that Mr. Jaitley has spoken on these lines. In March, speaking in Rajya Sabha, he had said: “This issue of loan waiver has cropped up in several states. The Centre has its policies for the agriculture sector under which we provide interest subvention and other support. We will continue to give all that. If a state has its own resources and wants to go ahead in that direction, it will have to find its resources. The situation where the Centre will help one state and not the others will not arise.”
On the issue of bad loans, Mr. Jaitley said the Reserve Bank of India (RBI) is at an advanced stage of preparing a list of debtors whose cases will be considered for speedy resolution through the Insolvency and Bankruptcy Code (IBC) process. Speaking to reporters after the meeting, Mr. Jaitley said, “Under the new ordinance issued, the RBI is at a fairly advanced stage of preparing a list of those debtors where a resolution is required through IBC process. You will be shortly hearing about it.”
He added that the meeting also discussed the challenge regarding weak credit growth as well as the state of resolution of Non Performing Assets (NPA) as well as the state of finances of PSBs. “There are already about 81 cases filed under the IBC, of these 18 cases have been initiated by financial creditors. These are already before the National Company Law Tribunal and since bulk of the NPAs – about 70% – are either in consortium or in multiple banking arrangement, the speedy resolution is required,” the minister said. RBI Deputy Governor S.S. Mundra, who also attended the meeting, said the RBI is discussing the issue of bad loans with banks and that “information has already been collected on such accounts from banks”. The RBI is learnt to be looking at certain large stressed accounts. Guidance from an internal advisory panel is expected soon on the accounts that would be referred to the IBC.
Officials said National Investment & Infrastructure Fund (NIIF) may also be roped in to help the banks in the sale of a portion of their stressed assets. “The NIIF has options of take out financing, and discussions were also held on providing last mile finance to stalled projects,” a senior official said, adding that telecom was among the sectors discussed for stressed assets resolution. During the meeting, a detailed presentation was made and it emerged that in FY17, the banks have made stable operating profit of Rs 1.5 lakh crore. Subject to various provisioning requirements, there has been a net profit of Rs 574 crore.
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