To check adverse impact of farm debt waiver programmes on the banking sector, heads of the public sector banks have now joined the chorus to seek elimination of such schemes after the issue was red-flagged by RBI Governor Raghuram Rajan last month. last month, the RBI Governor had said that debt waiver schemes have constrained flow of credit to farmers.
"In some states on certain occasions we have had debt waivers. How effective these debt waivers have beenIJ In fact the studies that we have typically show that they have been ineffective. In fact they have constrained the credit flow post waiver to the farmers," he had said.
Doing away with debt waivers schemes of the Government was one of the recommendations by the bankers at 'Gyan Sangam' or Bankers' Retreat which concluded here on Saturday.