'Debt waiver has affected recovery'

The National Bank for Agriculture and Rural Development (Nabard) today said that the recovery process has slowed down due to the debt waiver scheme.

“Last year, the recovery rate was 65-66 per cent. This year, the payment habits of farmers have taken a hit. Even those who were repaying regularly have stopped paying on the expectation of another waiver. As far as the trend goes, the recovery rate will slide below 50 per cent this year,” said an executive at Nabard said.

Recently, as a relief to farmers under the loan waiver scheme, the Union government allowed them to pay the first instalment of their dues by March 2009 instead of the earlier date of September 2008, following requests from the banks. This was under the “Debt Relief” in the farm loan waiver package announced in the last Union budget as borrowers failed to pay up their dues within the stipulated period.

The nodal agency for agricultural credit, along with the state cooperatives banks, is offering incentive schemes to step-up the recovery process.

“State cooperative banks are offering loans at lower interest to farmers for paying their dues in time,” he added.

However, Nabard is hopeful of meeting its annual budgetary target of loan disbursement.

“Till December 31, we have disbursed around Rs 1,96,000 crore against our annual target of Rs 2,80,000 crore. We are expecting some recovery from private and foreign banks, and hopefully, we will meet our annual target,” said Nabard Managing Director K G Karmakar.

In the previous financial year, Nabard disbursed farm loans worth Rs 2,41,000 crore, exceeding the target of Rs 2,25,000 crore, Karmakar said. Similarly, the bank might not cross the last years refinance figures.

Until the end of December, Nabard has provided around Rs 20,000 crore as refinance to cooperative and rural banks, of which Rs 11,000 crore was for short-term credit and Rs 9,000 as long-term finance.

“Last year, we disbursed Rs 24,000 crore under the refinance facility and this year, we would be able to match it,” said Nabard chairman U Sarangi.