Friday, June 13, 2008

ASSOCHAM concerned over farm loan circular

by Jo Black

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) President, Mr. Venugopal N. Dhoot, expressed grave concern over the withdrawal of a circular issued by the State Bank of India that sought a blanket ban on loan extensions to farmers to buy tractors and other farming equipment, saying that it would send wrong signals and encourage farming community not to pay off their debts.

In a statement Mr. Dhoot said that it seemed that SBI came under heavy political pressures from various quarters including bureaucracy which forced it to withdraw the circular, which is not a healthy practice in a vibrant democracy like that of India.

The ASSOCHAM Chief further said that as a result of withdrawal of this particular circular, the balance sheet of the State bank of India would adversely be affected and its profitability would erode to a great extent, as the bank issued the circular as a pressure practice to effect its recoveries.

According to Mr. Dhoot, most of the farmers would welcome this move and take it easy not to honor and adhere to their loan repayment schedule and one day mount a pressure on the government for waiver of their loans incurred for the purpose of buying tractors and other farming equipment.

The ASSOCHAM Chief reminded that the majority of the farming community that seek loan facilities for buying not only tractors and other farming community do not belong to poorer classes, on the contrary most of such farmers are richer and well to do and therefore, by withdrawing such a circular, the message is being sent out that one can swallow such loans.

Keeping the above in view, the ASSOCHAM has demanded that the SBI should withdraw its circular and political parties should also be careful not to pressurize the bank into taking economic decisions that are unviable in nature, otherwise the public sector banking system will collapse and political parties, for their ulterior motives, will continue to raise demands that are unjustified, said Mr. Dhoot.

 

 

 

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