NEW DELHI: Reserve Bank of India (RBI) governor Urjit Patel expressed displeasure over the decision of farm loan waiver in a monetary policy meet today saying it can discourage an honest credit culture, and crowd out private borrowers. It is the time to eschew loan waiver culture, he said.
Earlier this week, Uttar Pradesh’s new chief minister Yogi Adityanath has fulfilled his party’s poll-promise of waiving farm loans up to Rs 1 lakh. The move will help more than 2.22 crore small amd marginal farmers in the state and would cost the state government a whopping Rs 36,400 crore.
‘Farm loan waiver undermines honest credit culture, impacts credit discipline,” Patel said in the meet, highlighting the worry over the structure of public finance and health of banks and the relationshhip formal lending institutions have with farmers.