The Hindu Business Line : Fund mooted to improve loan recovery rates

Addressing the State-Level Bankers’ Committee (SLBC) conference here on Monday to finalise the credit plan for the State for 2009-10, the Chief Minister, Dr Y.S. Rajasekhara Reddy, said that the idea was to cater to the needs of those farmers and other beneficiaries who were unable to repay due to extraordinary reasons.

Stating that recovery rates fell to 85-90 per cent in the last 4-5 months, he alleged that some political parties had promised to waive the loans (up to Rs 20,000 crore) if they came to power.

“This had led to certain fall in the recovery rates. But it picked up in June-July and stood at 97 per cent,” he said.

He, however, felt that there could be some genuine cases when someone in the family died or someone got incapacitated. “In order to attend these and other cases, we are proposing to set up a fund in consultation with banks,” he said.

Asking the officials and bankers to make all farmers join the farm insurance scheme, he said the total claim settlements in 2007-08 in the State was at Rs 800 crore. About 50 per cent of this will be borne by the Centre.

Pointing out that last year’s debt waiver was a one-off event, he asked the officials to persuade the farmers to pay insurance premiums that would be handy if their crops failed.

Co-op farming

Dr Rajasekhara Reddy also asked the bankers to give loans to tribals, who were going to get 12 lakh acres in the next few weeks, and to the upcoming cooperative farming initiative.

The State Gross Domestic Product (GSDP) of Andhra Pradesh surpassed the national average by one percentage point.

“It used to be less than the national average till a few years ago. But our efforts to make money available in the hands of the people helped to increase their purchasing capacity. This, in turn, resulted in spending,” he pointed out.

More Stories on : Farm credit | Andhra Pradesh

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