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'No loans reschedule situation seen’, says RBI Governor

August 5, 2014 - Hyderabad

When on one side the Andhra Pradesh and Telangana Governments have been speaking on loan waiver by the respective governments since the day one, the Reserve Bank of India Governor Raghuram Rajam on Tuesday said that the districts in both the States did not meet the prime-facie requirements for loan re-schedule.

‘We are in discussion with these governments to see where exactly the distress is so that we can take a more reasoned and focused view. It doesn’t appear from the production data that the Phailin cyclone had caused widespread damage’, said Raghuram Rajan.

The RBI governor said that it has been quite categorical about the dangers of talking about loan waivers. He said that some banks have complained that farmers have already stopped repaying the loans in anticipating of loan waiver. He quoted that Vijaya Bank’s first quarterly non-performing loans rose by Rs.45 crore only due to this factor.

• Telangana Chief Minister K Chandrasekhar Rao said that the Cabinet has taken a decision to waive crop loans and will be implemented.
• AP Chief Minister Nara Chandrababu Naidu has promised to waive all crop loans and gold loans (Agriculture) will be waived up to Rs.1.5 lakh. The Minister for Agriculture Prathipati Pulla Rao has on Monday asked the farmers who have capacity to repay loans as the loan waiver may take a two months’ time.

RBI Master circular says: If crop production or anticipated production falls below 50 per cent because of a catastrophe or natural disaster, the district collector can declare a state of emergency which triggers the possibility of loan re-scheduling but such situation is not seen in the districts of Telangana and Andhra Pradesh.

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