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The proposal to waive bank loans to the extent of Rs 60,000 crore has unfortunately been welcomed by public-sector bank chiefs.

The Finance Minister should know that farmers who have repaid their dues promptly would feel foolish. The proposal will affect the credit culture of the entire country. Already the moral hazard in the agriculture sector is very high in India due to re peated loan waivers in the past.

The Government has not been able to free farmers from the clutches of usurious moneylenders. There are State legislations against people who charge usurious rates of interest. Even today a majority of the farming community has not been covered by the institutional lending system.

Unfortunately, the people who matter in banking industry are also favouring such loan waiver proposals. This implies the extent of politicisation of banking industry in India.

K.V. Rao, Assistant General Manager (retd), State Bank of India

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