Recent waive off of farmers’ loan has convinced the farmers that their loans would be waived in future too and thus are not paying back the loans, leading to fear of crippling banking system in the country, felt many bankers.
This will raise banks already high-levels of NPAs also, they say. There are many cases of banks denying loans to customers.
About 90% of the cooperative bank loans are short-term crop loans that farmers take to buy seeds, fertiliser and other inputs.
In 2017-18, the advances by the cooperative banks had grown by 24%.After the new farm loan waiver announced by the Congress government, the growth is likely to fall further.