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

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

- in Loan
224
Comments Off on States will have to bear farm loan waivers from their own coffers: Jaitley

On bad loans, he says the RBI is preparing a list of debtors whose cases will be considered for speedy resolution

The States going in for farm loan waivers will have to generate funds from their own resources, Finance minister Arun Jaitley said on Monday came after a meeting he had 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 in 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, he said in the Rajya Sabha, “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 bad loans, Mr. Jaitley said the Reserve Bank of India is at an advanced stage of preparing a list of debtors whose cases would be considered for speedy resolution through the Insolvency and Bankruptcy Code (IBC) process.

Mr. Jaitley, who was speaking to reporters, 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.”

The meeting, he said, also discussed the challenge regarding weak credit growth as well as the state of resolution of Non Performing Assets (NPA) and the state of finances of the 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 the bulk of the NPAs – about 70% – are either in consortium or in multiple banking arrangement, a speedy resolution is required,” he said.

RBI Deputy Governor S.S. Mundra, who attended the meeting, said the RBI was 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.

At 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.

Mr. Jaitley said though PSB consolidation was not on the meeting’s agenda, “We are actively moving in that direction. I can’t give you further details as these are price-sensitive information. But you can take it that there is movement in that direction.”

The meeting also reviewed all financial inclusion schemes, the Stand Up India initiative, cyber-security and Goods and Services Tax related issues.

[“Source-ndtv”]