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AP govt to rope in non-banking firms
The Andhra Pradesh government, which has been facing severe criticism with regard to the delay in waiving loans of farmers, has decided to rope in Non Banking Finance Firms (NBFCs) in its flagship programme, ‘Farmers Debt Redemption Scheme’. What is being touted as the first-of-its-kind effort in the country, the Andhra Pradesh government proposes to convene a meeting with NBFCs next week and convince them to participate in the Farmers Debt Redemption Scheme.
FARMERS’ DEBT REDEMPTION
Hyderabad: The Andhra Pradesh government, which has been facing severe criticism with regard to the delay in waiving loans of farmers, has decided to rope in Non Banking Finance Firms (NBFCs) in its flagship programme, ‘Farmers Debt Redemption Scheme’. What is being touted as the first-of-its-kind effort in the country, the Andhra Pradesh government proposes to convene a meeting with NBFCs next week and convince them to participate in the Farmers Debt Redemption Scheme.
According to official sources, the government will issue bonds to farmers against their outstanding loan amounts. In turn, farmers can raise money by pledging these bonds with the NBFCs for which the government will stand guarantee and pay the same to finance firms over a fixed period by way of installments. Under this new scheme, farmers can raise money by pledging the bonds with NBFCs and clear their loans in one go and make them eligible to avail fresh loans from the banks.
If this proposal clicks, then the government need not wait for the next four years to clear the farmers’ debts in installments. It will also help the government politically as it can fulfill its promise within one year of coming to power, despite adverse financial conditions. A final decision on this issue is expected to be taken after a meeting of the senior officials with Chief Minister N Chandrababu Naidu ahead of the next Cabinet meeting scheduled to be held on Wednesday. Sources said the government was yet to clear about Rs 21000 crore along with 10 percent interest to various banks. About 42 lakh farmers are to be covered under the scheme.
By:VRC Phaniharan
