Govt., bankers yet to arrive at a formula to resolve NPAs

Loan waiver scheme will benefit about 23.71 lakh accounts in commercial banks

As the government’s ambitious farm loan waiver scheme enters the crucial data sanitisation phase, the knotty issue of resolving non-performing assets (NPA) in the agriculture sector still remains to be addressed.

The bankers and the government are yet to come to an agreement on ways to resolve the issue as the government is expecting banks to use their regular schemes for NPA resolution.

While top Finance Department officials said the government is waiting for the formulation of a plan for NPA settlement under the government’s farm loan waiver scheme, they also said it is not a big component in the loan waiver scheme. The loan waiver scheme is set to benefit about 23.71 lakh loan accounts in commercial banks across the State. A large number of these accounts are restructured loans and overdue loans.

“Each bank has announced its own scheme for resolution of NPA, some of which include interest waiver and about 50% exemption on principle. In fact, these schemes are currently open to individual borrowers. The government is expecting banks to cover farmers whose loans have become NPA under the farm loan waiver scheme,” said a government source directly involved in the loan waiver implementation.

“The government has indicated that it will fund the account ₹2 lakh after the NPA resolution formula is applied to the account. We will believe it is a win-win situation for both,” the source said.

Another senior Finance Department official said the government was expecting a “common formulation” for resolution of agriculture loan NPAs, and that the State-level bankers’ committee (SLBC) is working on the same. When contacted, SLBC officials refused to comment.

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