The Hindu Business Line : Debt waiver

This has reference to the statements issued by the Chairman & Managing Directors of two public sector banks, namely Bank of India and Union Bank of India (Business Line, March 4).

Both the CMDs’ reactions to the Finance Minister’s Rs 60,000-crore debt waiver scheme have been positive. One can understand the Finance Minister’s gesture of extravagant sops in an election year because he is a politician.

But it is disheartening when bank chairmen speak positively of loan waivers in public.

What is the message these people want to convey to the farmers, in particular, and the public, in general?

Is it that farmers should take finance from banks, wait up to an election year and be reimbursed with a waiver? Then, instead of offering them as loans, they can as well be distributed as money packets every election year. As bankers, the Chairmen should know how difficult it is to go round the service areas of every bank branch, lend money and then recover the amount.

Defaulters apart, what will be the plight of regular borrowers who have with great difficulty paid back part of their dues well in time. They are demoralised by the package for defaulters.

In the next financial year, it will be easy for banks to wipe off bad debts from their balance sheets by adjusting the funds infused from the Government. But, what then?

Again, the same set of farmers will be eligible for finance in order to revive the rural economy. How can the banks lend and hope to recover the loans?

Will the Government once again come to the rescue of the banks and farmers? Unlikely, because everyday is not Sunday!

K. A. L. Rao Bangalore

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