Market panics, but bankers welcome farm loan waiver

February 29th, 2008 - 6:38 pm ICT by admin  

A file-photo of P. Chidambaram

Mumbai, Feb 29 (IANS) Contrary to volatile stock market reactions, bankers have welcomed the government’s farm loan waiver since it will help them to wipe off farm sector non-performing assets (NPAs) they have been saddled with for the past several years. “The plummeting of the banking stocks was merely a panic reaction. However, for us bankers, this is a golden opportunity to clean the slate off the massive NPAs accumulated in the agrarian sector,” M.V. Nair, chairman and managing director of Union Bank of India, told IANS.

Agreeing with Nair, chairman and managing director of Bank of India T.S. Narayanasami said: “The finance minister’s announcement augurs well for nationalised banks as well as the farm sector. It is actually a win-win situation for all parties concerned.”

About the plummeting of banking stocks after the waiver announcement, Narayanasami said: “I am all at sea.”

Canara Bank’s chairman and managing director M.B.N. Rao adopted a more cautious stance, saying it was too early to assess the impact of the farm loan waiver on the agrarian economy and the banking sector.

“Most of the banks have already taken a hit at the NPAs and now we will have to wait for the entire modalities to come out to see how much relief we will be getting. Overall, I personally feel that the finance minister has adopted a very realistic approach and done the right thing,” Rao said.

Banking stocks started sliding Friday as soon as Finance Minister P. Chidambaram, presenting the budget for 2008-09, announced a proposal to waive farm loans.

The Bankex index on the Bombay Stock Exchange plummeted 210.19 points or 2.09 percent. All the 18 banking scrips in the index started trading in the red.It had opened at 10,021.76 points.

At the close of trading, however, Bankex recovered, clocking 10,113.73 points, a gain of 39.82 or 0.40 percent.

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