States will have to find funds for farm loan waivers: Jaitley

States will have to find funds for farm loan waivers: Jaitley

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New Delhi, Jun 12

Union Finance Minister Arun Jaitley today made it clear that the Central Government was not going to fund for farmer’s loan waiver to the State Governments. He said the states willing to go in for the farm loan waiver will have to generate funds from their own resources. Replying to a query related to the announcement made by the Maharashtra Chief Minister Devendra Fadnavis to waive off the loan of the farmers to the tune of Rs 30,000-crore, the Finance Minister told reporters after a review meeting with the chiefs of Public Sector Banks (PSBs), that it was up to the State Government.

Earlier, the Uttar Pradesh Government had announced Rs 36,000-crore loan waiver. At that time also, the Finance Minister had made it clear that states wouldn’t get financial assistance from Centre on this count. Regarding Non Performing Assets (NPAs) of Public Sector Banks (PSBs), Mr Jaitley said Reserve Bank of India (RBI) is in an advanced stage of preparing a list of bad loans where resolution is required under the insolvency and bankruptcy rule. He added that the Government was seriously and actively working on consolidation of state-owned banks.

On the health of PSBs, the Finance Minister said banks made a “stable operating profit” of Rs 1.5-lakh-crore in 2016-17. Mr Jaitley said, “The RBI is at a fairly advanced stage of preparing a list of those debtors where a resolution is required through the IBC (Insolvency and Bankruptcy Code) process and you will shortly be hearing about it.” In the meeting, the RBI Deputy Governor SS Mundra and other top officials were also present apart from the heads of PSBs. Public banks are sitting on a mountain of bad loans to the tune of over Rs 6-lakh-crore at the end of 2016-17.

A top ministry official said there is no option but to resolve the NPAs as far as the sectoral source is concerned. Rules have been framed for the six such large sectors and task forces have been on the job. Sectors like iron and steel and power account for the biggest chunk of soured loans for India’s banks. The bulk of the stressed assets are held by 21 lenders majority-owned by the Government.

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