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Farm loan waiver to benefit cooperative banks in Rajasthan
The Rajasthan government has announced to waive off cooperative loans of farmers up to ₹2 lakh under the farm loan waiver scheme in Rajasthan.
Rajasthan government’s farm loan waiver scheme has served twin purpose. While the scheme has given relief to the farmers reeling under debt, it is also helping cooperative societies improve the non-performing assets (NPAs) through recovery of bad loans, say experts.
“Cooperative banks and PACS (primary agricultural credit societies) have not only recovered the regular non overdue and overdue cooperative loans, but also the farm loan principal amount, overdue interest and penalties on the cooperative loans,” Inder Singh, the managing director (MD) of Rajasthan State Cooperative Banks Limited told HT.
For instance, if any farmer had taken a cooperative loan of ₹2 lakh and it carried an overdue interest of ₹3 lakh, the state government would not only pay the principal loan amount of ₹2 lakh to the cooperative banks, but also the interest amount of ₹3 lakh, which will improve the financial health of cooperative banks, he said.
Moreover, the principal amount of ₹2 lakh will go into the rotation of refinancing, he said, adding that the government’s move is unprecedented.
Singh said the former BJP government in Rajasthan had waived farm loans of worth ₹2,000 crore last year against the announced waiver of ₹8,000 crore. However, the current government is waiving farm loans worth ₹10,000 crore, along with the remaining ₹6,000 crore crop loan waiver announced by the BJP government.
He said the loan waiver scheme will benefit 25 lakh farmers in Rajasthan. “Farm loan waiver would offset the financial losses (including bad loans and NPA) of worth ₹3,500 crore of the apex bank, cooperative banks and PACS,” Singh said.
Balvinder Singh Gill, the MD of Kota Central Cooperative Bank Ltd, said the farm loan waiver has not only given relief to the farmers who had long overdue cooperative loans, but also made them eligible for further loans. The scheme would strengthen the cooperative movements and structure of the apex bank, cooperative banks and PACS, he added.
Inder Singh said, “Under the current farm loan waiver scheme, loans of around 19.74 lakh farmers have already been waived in the state so far.”
He said ₹6,005 crore non overdue loans and ₹1,104 crore overdue loans have been covered under the farm loan waiver, which would help the apex bank, cooperative banks and PACS make profit of ₹500 crore.
Dashrath Kumar, the general secretary of Hadoti Kisan Union, which looks after farmer interests, said that the farm loan waiver would be beneficial for both farmers and cooperative societies. He said that cooperative banks had also witnessed major boost after farm loan waiver in 2008 when farm loan waiver was done by the then Union government.
It may be recalled here that the state government has announced to waive off cooperative loans of farmers up to ₹2 lakh under the farm loan waiver scheme in Rajasthan.
