FIAKS community had some intriguing questions regarding the Farm loan waiver decision. Some of them are –
- Does the government actually pay off the loans on behalf of the farmers?
- If not does it show up as an NPA for the banks?
- What does it do to the CIBIL scores of those who got the waiver?
- How it helps the insurance companies & banks?
Several CEO/CXO/Founders from FIAKS Community participated in the discussions:
- Mr Sridhar R, President & Credit Risk Officer, Lakshmi Vilas Bank
- Dr R Bhaskaran, Former Chief Executive Officer,IIBF
- Mr Riaz Maniyar, Founder & CEO at easy2lend.com
- Mr Ajay B Panicker, CEO & Founder, NetPay Limited
- Mr Sony A, Head – Digital, South Indian Bank
- Mr Abhay Kiulkarni, General Manager Sales, Worldline Global
- Mr P B Prakash, Head Financial Institutions Group, Indusind Bank
- Mr Sanjay Swamy, Managing Partner & Co-Founder, PRIME Venture Partners
- Mr Raghu Veer Dendukuri , Product Owner, Intandemly
- Mr Vikas R Panditrao, Advisor, Forum of Industry Academic Knowledge Sharing(FIAKS)
- Several other CEO/CXO Bankers & Fintech professional on FIAKS Forum
These Farm loan waivers that supposedly help farmers seem to actually help banks and crop insurance companies more. A banker explains that the waiver amount reaches the bank after a considerable delay and this delay has cost implications to the banks. A doctor further explains how banks and insurance companies benefit from this – the loan is only a portion of the cost of cultivation, say half or a third or so of production value. This means that if a farmer has suffered a loss, then the waiver takes care of only a portion of the loss. If the farmers have not suffered, then the waiver is a bonus. Insurance has a way to measure loss albeit not perfect. A blanket waiver is given every five years and it is purely vote oriented. There are pockets of distress. But considering the fact that the country has achieved food security and there is no shortage of market arrivals, then a blanket waiver is, on economic grounds, not justified. If MSP is lower it does not result in total loss. Can the banks complain? No.
Register and read the summary of the discussions. To join the FIAKS community. Visit http://fiaks.com