Banks brace for high agri defaults, low credit offtake

According to PSU banks, recovery of short-term loans so far is 20% lower than in last year

Banks are bracing for high defaults in agriculture loans this financial year. While demonetisation had already affected recovery, rumours of debt waiver in states where Assembly 

elections were held have added to the defaults.  

This apart, drought in southern states such as Karnataka and Tamil Nadu have further accentuated defaults.

According to public sector banks (PSBs), on a conservative basis, recovery of short-term loans so far this year have been around 20 per cent lower than last year. 

The impact of a slow recovery is already visible in fresh offtake of loans. According to data from the Reserve Bank of India (RBI), agriculture