Chandigarh: Banks in Punjab have stopped fresh lending to farmers who are defaulting on repayments in anticipation of a debt waiver, with loan recoveries plummeting by about 60% in the state, bankers said.
After the Punjab government announced a debt waiver for farming sector, growers in several parts of the state have stopped repayment of bank loans in anticipation of relief. “We have witnessed about 60% drop in repayment of farm loans as accounts are turning irregular,” Punjab state level bankers committee (SLBC) convener and Punjab National Bank general manager (Punjab) P.S. Chauhan said on Thursday. “It is happening as farmers are waiting for debt waiver implementation,” he pointed out. Because of accounts turning irregular, banks have stopped fresh lending in such accounts.
“In accounts which have become irregular, we are not making any enhancement in such loan accounts. For example, if a defaulting farmer wants enhancement of Rs1 lakh in his loan account, we are not allowing this,” he said. To speed up recoveries, banks are warning growers that they would not get interest subvention in crop loan if they fail to repay loans. “There will be no interest subvention of 3% available to farmers if he does not repay loan. Moreover he will also not be eligible for fresh lending,” he said. Not only in commercial banks, the recovery of loan has been hit in case of cooperative loans as well, the official said. Read more
After the Punjab government announced a debt waiver for farming sector, growers in several parts of the state have stopped repayment of bank loans in anticipation of relief. “We have witnessed about 60% drop in repayment of farm loans as accounts are turning irregular,” Punjab state level bankers committee (SLBC) convener and Punjab National Bank general manager (Punjab) P.S. Chauhan said on Thursday. “It is happening as farmers are waiting for debt waiver implementation,” he pointed out. Because of accounts turning irregular, banks have stopped fresh lending in such accounts.
“In accounts which have become irregular, we are not making any enhancement in such loan accounts. For example, if a defaulting farmer wants enhancement of Rs1 lakh in his loan account, we are not allowing this,” he said. To speed up recoveries, banks are warning growers that they would not get interest subvention in crop loan if they fail to repay loans. “There will be no interest subvention of 3% available to farmers if he does not repay loan. Moreover he will also not be eligible for fresh lending,” he said. Not only in commercial banks, the recovery of loan has been hit in case of cooperative loans as well, the official said. Read more