FARM DEBT RELIEF COMES TO HAUNT BANKS

The farm debt waiver and relief scheme is still haunting banks. 


The Govt. allowed farmers to pay 75% of the outstanding amount in three instalments to get a 25% relief. In the wake of poor response from the farmers, the Govt. extended the deadline to December 2009. However, many farmers have deferred paying their installments in the hope for a fresh package from the government. 


As a result, banks are reporting a higher level of defaults. At least two banks – Bank of Baroda and Corporation Bank — have made higher provisions during the quarter-ended December, as many of the potential debt relief beneficiaries did not make use of the scheme. Since the were not repaid even after six months of the original deadline, many other banks have also started making provision for these bad debts.


Source: http://www.business-standard.com/india/news/farm-debt-relief-comes-to-haunt-banks/385047/