Reserve Bank of India has scrapped numerous loan restructuring programmes
prevalent among banks to restructure defaulted loans and made resolution of
defaults time bound with the Insolvency and Bankruptcy Code becoming the
main tool to deal with defaulters. The central bank has warned banks of
monetary penalties and higher provisions if banks are found to have violated
or found `evergreening' accounts to escape its stringent new norms on fixing
Minister Vasundhara Raje chose to focus on the agriculture sector in her
last budget before assembly elections are held in the state later this year.
The centre-piece is a loan waiver that is expected to benefit nearly 22 lakh
small farmers and cost the state an extra 8000 crores. The farming sector
had been key focus area in the recently announced Union budget as well.
The Chief Minister
has also waived tax on irrigated agricultural land, which will benefit
nearly 50 lakh farmers. A loan relief commission has also been set up to
consider long-term solutions to farmers' debts. The loan waiver, however,
will only apply to farmers who have taken a loan from the agricultural
cooperatives. Those who have bank loans will receive no benefit.