India’s state owned bank SBI’s (State Bank of India’s) recent decision on restricting loan allotment to farmers may worsen the ongoing food crisis further; at least US may think so! Though, the decision is very likely to be revoked seeing the government’s pro-farmer image. With general election over head,the issue may raise heat in political circles too. Even otherwise, with monsoon just about to start giving new hopes to the farmers, SBI’s decision may not add sufficient fuels to rejoice them.

The rock hard decision might have rolled up following the government’s recent decision of waiving off farm loans in the tune of Rs. 60,000 crore, which has credited SBI with huge financial burden. Though, the bank has asked all of its branches to stop sanctioning loans against farm equipments afresh with immediate effect, but how far they are going to implement it, is yet to be seen.

In a separate bid, SBI has rejuvenated it’s loan recovery channels to monitor all outstanding loans, especially those that are pending against agro-equipments, like tractors, power tillers, etc. According to the media reports, SBI officials have been asked to reach to the dealers of farm equipments for collecting details of defaulting farmers and further advising them to avail the government’s loan waiving scheme. The effort, if successful, may reduce bank’s non-performing assets (NPAs). Presently, SBI’s farm loans constitute about 17% of NPA, which is quite high and causing impedance for the bank’s formal growth.