Loan waiver won’t harm banks: PNB

Loan waiver won’t harm banks: PNB
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First Published: Tue, Mar 04 2008. 04 21 PM IST
Updated: Tue, Mar 04 2008. 04 21 PM IST
Reuters
New Delhi: Punjab National Bank, which has Rs900 crore worth of bad loans to farmers, doesn’t see any adverse impact from the government’s debt-waiver scheme, its chairman said on 4 March.
The government on 29 February proposed a scheme to waive Rs60,000 crore of bank loans to bail out farmers who have been fighting rising cost of inputs and failing crops.
Finance minister P. Chidambaram, while presenting the Budget for FY 2008-09, assured that banks would be provided adequate “liquidity” for the debt write-off. The government is yet to finalize the financing method.
“There won’t be any additional hit out of this measure,” PNB Chairman K.C. Chakrabarty told reporters, on the sidelines of an industry conference.
“We are talking about write-off of only those non performing assets whose recovery was not coming. So the banks don’t stand to lose.”
PNB has about Rs500 crore of bad loans with small and marginal farmers and another Rs400 crore of bad farm loans with others, he said.
Chakrabarty said big farmers will be able to avail a one-time settlement of their bad loans only if they have paid 75% of the loan, which would be “an incentive” for the bank.
“We are not talking of waiver for wilful defaulters. We are talking about waiver to the farmer whose project has failed, who has not been able to do anything,” he said.
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First Published: Tue, Mar 04 2008. 04 21 PM IST