Letters: Strike a balance

Loan waivers irritate honest borrowers, who see potential defaulters as beneficiaries of such schemes that lead to NPAs

Namrata Acharya’s report, “Agri, education pangs for priority sector lending” (October 19), discusses a drop in credit disbursement for agriculture and education. At the outset, there is a dichotomy between recovery of non-performing assets (NPA) and credit disbursement; this upsets budgetary planning. The first lays stress on recovery of bad loans to strengthen the capital base and display a more transparent balance sheet for banks. In the process, fresh credit disbursement is being delayed and hence the year-to-year negative variance.
 
Post nationalisation, bank policies require at least 40 per cent priority sector lending or investment in the Rural Infrastructure