Banks suggest easier farm loan rules to remove stress

Banks are collating these suggestions from grassroots employees, refining them and are likely to handover the suggestions to the government in the first week of September.

Public sector banks are likely to make a pitch to the government for allowing farmers borrow afresh even before clearing their previous loans, a step that would help them to de-stress and gain access to bank funds seamlessly even during natural calamities.

The present rule does not allow farmers take new loans before clearing past dues. This is one of the major takeaways from banks' branch level consultation exercise which has been going on for the past one week.

Banks also want more robust loan guarantee architecture for Mudra loans, and are in favour of an umbrella cyber security framework for the entire sector.

Banks are collating these suggestions from grassroots employees, refining them and are likely to handover the suggestions to the government in the first week of September.

Prime Minister Narendra Modi will hold the meeting with banks.

"The major concern area for the government has been the falling market share of public sector banks. The exercise would also help an image makeover for public sector banks," United Bank of India chief executive officer Ashok Kumar Pradhan said Friday from the platform a state level inter-bank group consultation in Kolkata.

Pradhan said that the farm loans have seen stress rising to double digit and the phenomenon is visible across the country. To address this, banks are suggesting that farmers may take fresh farm loans under Kisan Credit Card, even if they are not in a position to payback the previous loans but able to service the loans by making interest payment, a structure which is allowed for MSME customers.

State Bank of India's regional head in Kolkata Ranjan Kumar Mishra said that a credit guarantee scheme for agri loans could be envisaged to improve flow of bank credit to the sector.

Cyber security is another issue which keeps bank chiefs always on alert. They are of the view that an umbrella framework would address the concerns better, rather than individual banks attempting to do it individually.

(https://economictimes.indiatimes.com/news/economy/agriculture/banks-suggest-easier-farm-loan-rules-to-remove-stress/articleshow/70802804.cms 24 August 2019)