No decision at Andhra Pradesh government-bankers meeting on loan waiver

HYDERABAD: Bankers remained non-committal to the Andhra Pradesh government's proposal for partial repayment of crop loans, as part of its loan waiver scheme, sources said here today.

However, the AP state government has decided to form a Farmers' Empowerment Corporation to absorb the liability on account of the promised crop loan waiver, sources said.

A marathon five-hour meeting with bankers here tonight, which was attended by Andhra Pradesh Chief Minister N Chandrababu Naidu, some of his cabinet colleagues, AP state government's Resources Management Committee chairman and MP Y S Chowdary, failed to reach a concrete decision on the way forward on the crop loan waiver.

AP state Finance Minister Yanamala Ramakrishnudu is scheduled to hold another round of talks with the State-Level Bankers' Committee here tomorrow to persuade it to accept the AP government's proposals on the crop loan waiver.

It may be recalled that the Chandrababu Naidu government had promised to waive all crop loans up to Rs 1.50 lakh amounting to an estimated Rs 40,000 crore, but given the precarious financial situation of the AP state government due to bifurcation of the state, it has not been able to fulfil its promise even after four months of staying in power.

Initially, it had hoped to get the loans rescheduled in order to buy time, but the Reserve Bank of India (RBI) did not concede the AP state government's request.

"The RBI put us to a lot of trouble on the crop loan waiver. We have now placed a set of proposals before the bankers but they have not yet agreed. They are forming a sub-committee to consider our proposals. They appear 99 per cent inclined to accept our proposals," Chowdary told reporters at the end of tonight's meeting.

He said that the AP state government is ready to do whatever the bankers suggest, to ensure that farmers are not put to any hardship.

"Our idea is to form a Farmers' Empowerment Corporation with a corpus of Rs 5,000 crore to Rs 7,000 crore. We have already earmarked Rs 5,000 crore in the state budget while the rest too will be drawn from it," the MP said.

The Farmers' Empowerment Corporation would be in place after October 15 after the AP state cabinet approves its incorporation, he said.

As per the AP government's proposal, the amount would be paid to the banks in the name of farmers as a portion of the loan waiver.

Farmers who have already cleared their dues would be issued certificates with a maturity date and an annual interest of 10 per cent.

"Farmers could encash the certificates from January 2015 if they wish to but will not get any interest if they do so," Chowdary said.