Bankers ask government to desist from measures like farm debt waiver

NEW DELHI: Bankers have asked the government to desist from resorting to populist measures like farm debt waivers as these affect banks' profitability.

During a pre-budget consultative meeting with Finance Minister Arun Jaitley, representatives of banks and financial institutions also suggested they should be incentivised for digital/plastic payment in lieu of cash payments by giving 1% cash credit incentive and exemption from service tax to digital payments.

Uniform stamp duty for mortgages, and measures for early settlement of disputes through DRTs including Lok Adalats, were among the other suggestions given by them. "...government asked to discourage populist ideas like agriculture loan write-offs and SHG loan writeoffs," were among the other recommendations made by the representatives.

Recently the Telangana government has given the mandated 25%of the written off loan amount to the banks.

In 2008, the then UPA government at the Centre had come out with Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS) 2008 under which 3.69 crore small and marginal farmers and 60 lakh other farmers were given debt relief.

In his remarks, Jaitley said there is an "immediate need to give impetus" to credit growth. The credit growth, on year-on-year basis, declined to 10% in September 2014. He also pointed out that growth in deposits have also declined to 12.9% as of September 2014 from 13.7% as of March 2014.

Talking to reporters after the meeting, CMD of Indian Bank T M Bhasin said suggestions with regards to direct taxes and service tax matters were also given. "We also suggested the Rs 1.5 lakh (tax exemption) limit can be enhanced under 80C of I-T Act," he added.