TIL Desk/Business/Mumbai-State Bank of India (SBI) has floated a one-time settlement scheme for borrowers defaulting on loans taken to buy tractors. The country’s largest bank has also voiced reservations against the move to waive farm loans, saying this will affect the repayment culture in the country.
SBI executives said the tractor loan book was part of the bank’s farm loan portfolio and the bank announced settlement schemes regularly to shed doubtful debt where the prospects of recovery were low after making adequate provisions for such dud assets.
The settlement scheme for tractor loans began early last month and will continue till March 31. The scheme was for loans disbursed before September 30, 2011, and had up to Rs 25 lakh outstanding by September 2016, SBI Managing Director Rajnish Kumar said. SBI will take a haircut of 40 per cent on these loans.
In a portfolio of over Rs 4,000 crore of tractor loans, about Rs 800 crore will be eligible for the scheme. Crop failure and inability to deploy tractors were some of the reasons for the loans turning bad, SBI executives said.
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