UPA waives off farmer loans, SBI stops loans

NO LENDING: India's biggest nationalised bank cannot afford to give out loans for farm mechanisation.

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New Delhi: The State Bank of India is the largest bank in the country and traditionally doles out the maximum amount of loans to farmers across the country.

However, it has now decided to put on hold, any new loans to finance new tractors or farm mechanisation activities.

In a circular issued last Friday from Mumbai, the SBI has categorically stated that the bank has large portfolio of tractor loan accounts with high overdues.

Since many farmers benefit from Union Finance Minister P Chidambaram's budget declaration of farm-loan waiver of Rs 60,000 crores, India's biggest nationalised bank cannot afford to give out loans for tractors and farm mechanisation — which account for more than half in the agricultural loan sector.

Recently, State Bank Chairman, O P Bhatt told analysts that more farmers had stopped repaying loans since the debt waiver scheme had been announced.

Sources indicate that tractor sales all over the country will be showing a sharp decline following this decision by the State Bank of India.

The fear is now that other nationalised banks, who have to bear the burden of UPA government loan waiver, may soon follow SBI's footsteps.