Expectation of loan waiver has prompted farmers across states to stop repayment of money owed to financial institutions. This adds pressure on banks that are already grappling with a record pile of bad corporate debt.
Several bankers TOI spoke to confirmed that there was a rising trend of farmers refusing to clear dues, an issue that was also flagged at a meeting on Monday convened by the finance ministry. The total farm loans are estimated at a little under Rs 10 lakh crore.
While it is early to quantify the extent of loan delinquency by farmers, bankers say that in some states, the default rate has increased by up to 50% in recent months. “Farmers are emptying their bank accounts so that we cannot deduct the payment due from them,” the head of a large bank told TOI.