The Hindu Business Line : Prompt payers may feel cheated: Experts

Mangalore, Feb. 29 “Farmers do not need loan waiver. Rather, the Finance Minister should improve the pricing structure of agriculture commodities,” was what the reaction of Mr Sunny D’Souza, Secretary of the Dakshina Kannada district unit of Karnataka Rajya Raita Sangha (KRSS) for the loan waiver announced in the Union Budget 2008-09.

Mr D’Souza told Business Line that some farmers would expect such waivers in future also whenever they take loans. Quoting an instance in Bellary district, he said one farmer who took loans, anticipating that the Government will waive the loans, ended up losing his land.

It was better to fix a remunerative price for agriculture commodities produced by farmers, he said. He felt the farmer who has made prompt repayment, will feel cheated with this move.

Mr M. Srinivas Achar, President of the All-India Areca Growers’ Association, said that both those who had made prompt repayments and who had not availed themselves of loans would feel cheated. “Banking discipline may be lost in future with such loan waiver move,” he said.

Prof N.K. Thingalaya, noted rural banker, said that waiver of loans was undesirable. Though banks would not be losing financially, those who have made prompt repayment will be affected morally.

The Chairman and Chief Executive Officer of Karnataka Bank Ltd, Mr Ananthakrishna, said the proposal mentions about the overdue loans. Those who have made prompt repayment may feel that there is no incentive for them for being prompt, he said.

The Chairman and Managing Director of the Bank of Maharashtra, Mr M.D. Mallya, said that small and marginal farmers will be benefited to a larger extent with the move on loan waiver.

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