Advocate moves SC against governments writing off NPAs, waiving off farm loans

Tribune News Service
New Delhi, April 19

As political parties promise farm loan waive-off during poll season, an advocate has moved the Supreme Court against governments writing off non-performing assets (NPAs) and waiving off farm loans, contending it adversely affected India’s economy and amounted to transferring tax-payers’ money to defaulting borrowers.

Petitioner Reena N Singh sought a direction to the Ministry of Finance, states and union territories to restrain banks from technical write-off of NPAs and waive-off of farm loans as such decisions led to increase in fiscal deficit. She urged the court to ensure fair use of public funds which belong to the country.

The petition is likely to be taken up for hearing next week.

Pointing out that political parties were offering loan waiver schemes in their election manifesto to pursue their political motives, the petitioner said it was satisfied from the public exchequer by tax-payers’ money and not from the ruling parties’ funds.

She referred to news reports about farm loan waivers leading to Congress’ win in 2009 Lok Sabha polls.

The petitioner recalled how former Deputy RBI Governor KC Chakrabarty had said such technical write-offs encouraged non-transparency and wrongdoings.

As per RBI data for the 2017-18, only two public-sector banks were in profit from a list of 21 and in April 2018, the Comptroller and Auditor General of India had questioned RBI on the NPA crisis.

Farm loan waiver and corporate defaulters were two sides of the same coin, the petitioner submitted.

Terming it “a transfer from tax-payers to borrowers”, Singh submitted, “In order to grab power by luring particular sections of the vote-bank, especially farmers, these political parties, by offering temporary incentives like loan-waiving, are spoiling the economy’s credit culture and are permanently making the farmer financially weak and vulnerable.”

The petitioner said it appeared that the people sitting in power or political parties trying to come to power never wanted the majority of Indian farmers to come out of poverty due to vote-bank politics.

“The technical write-off of Non-Performing Assets is like tampering and fabrication of balance sheet which will not give the true and fair picture of its financial condition. The banks also get a percentage of around 7.5% to 8.5% of NPA as an allowable provision from their income which reduces their tax liability, which also directly indicates that NPAs are helping banks in reducing their taxes,” the petitioner submitted.