Click to play videoNew Delhi: The State Bank of India (SBI) has withdrawn its circular dated May 16 2008.
In the circular — issued last Friday from Mumbai — the bank had stated that it had a large portfolio of tractor loan accounts with high overdues and had thus decided to put on hold, any new loans to finance new tractors or farm mechanisation activities.
This circular had given rise to fears that other nationalised banks, who have to bear the burden of UPA government loan waiver, may soon follow SBI's footsteps.
Following the report that a circular had been issued, there was widespread anger and concern voiced across the political divide.
SBI Chairman, in an effort to placate everyone, made a statement on Wednesday saying, "We regret that our circular dated May 16, 2008, concerning tractor loans has been misunderstood and has given rise to concern. The circular is withdrawn with immediate effect."
SBI, the largest public sector bank in the country, traditionally doles out the maximum amount of loans to farmers across the country.
The cause for the release of the circular was widely seen as the Rs 60,000 crore loan waiver given to farmers this budget.
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