SBI freeze on equipment loan to farmers unfair: Ravi

May 20th, 2008 - 9:31 pm ICT by admin  

A file-photo of P. Chidambaram

New Delhi, May 20 (IANS) Minister for Parliamentary Affairs and Overseas Indian Affairs Vayalar Ravi Tuesday has taken exception to the state-owned State Bank of India (SBI) decision not to extend loans to farmers for buying tractors and other agricultural equipment. “It is unfair, and raises suspicion as the decision comes on the eve of assembly polls in Karnataka,” Ravi told IANS, and sought some control over the public sector financial institutions to restrain them from taking any unilateral step.

“The government should not give full freedom to the nationalised banks, and should have some control over them. SBI’s decision to stop equipment loan to farmers for the time being is unfortunate,” said Ravi.

He said the bank’s move comes at a time when the government was doing a lot to save farmers and support them in various ways to overcome the food crisis.

“It is not a right move, and will affect farmers. One hopes that the SBI reviews the decision as soon as possible, and withdraws the order to freeze equipment loan,” he said.

The bank’s temporary freeze on equipment loan to farmers was attributed to increasing defaults by the farmers to pay the loan amount bvack to the banks.

The SBI is the largest player in the tractor and farm financing business. The bank’s total farm sector advances are close to Rs.430 billion, and its non-performing loans are estimated at seven per cent of this portfolio.

According to SBI executives, there has been rise in defaults in agriculture loan ever since Finance Minister P. Chidambaram announced Rs.600 billion loan waiver for farmers in his budget for 2008-09.

“Even the farmers capable of paying bank loan are not repaying the debt now,” an executive, pleading anonymity, said.

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