With all political parties and sections in the government making their displeasure known over circular, SBI executives at the bank's corporate centre went into damage control mode late on Tuesday and Wednesday morning.
The bank's chairman O P Bhatt, who is out of the country on a business tour, issued a one-line statement this morning, reversing the decision. "We regret that our circular dated May 16, 2008, concerning tractor loans has been misunderstood and has given rise to concern. The circular is withdrawn with immediate effect," the statement said.
On Tuesday evening, Bhatt had issued a one-page note saying that last week's decision was based on rising defaults. While stating that the bank accorded top priority to agricultural lending, Bhatt exhorted borrowers to avail of the Rs 60,000-crore debt relief package and get back into the lending system.
On Friday, the bank issued instructions to its branches not to grant fresh loans for purchase of tractors, combine harvesters and other similar equipment for the next two months.
While none of the farmer lobby groups made a statement opposing the move, the political parties, including the Congress, voiced their concerns and sought a rollback of the decision.
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The Tractor Manufacturers Association (TMA), too, opposed the move and in a circular on Tuesday said sales may be hit. At least one tractor maker also approached SBI seeking a review of its decision.
Following the SBI announcement today, Anjanikumar Choudhari, president, farm equipment sector, Mahindra and Mahindra, said, "We welcome the decision by SBI today. Not only will the decision help farmers but it will also not impact the agricultural output negatively. This is the peak season to make purchases for tractors."
Tractor makers apart, even senior bankers