States must bear cost of farm loan waivers from own coffers, says Arun Jaitley

Finance minister Arun Jaitley on Monday said the States going in for farm loan waivers will have to generate funds from their own resources.His comments came after a meeting he held with public sector bank (PSB) chiefs, where among other things, the situation on bad loans was discussed.

Jaitley's comments come in the backdrop of farmers' agitations across the country as well as state governments such as Maharashtra and Uttar Pradesh - both BJP-ruled - announcing farm loan waivers.

On the issue of bad loans, Jaitley said the Reserve Bank of India (RBI) is at an advanced stage of preparing a list of debtors whose cases will be considered for speedy resolution through the Insolvency and Bankruptcy Code (IBC) process.

Speaking to reporters after the meeting, Jaitley said, “Under the new ordinance issued, the RBI is at a fairly advanced stage of preparing a list of those debtors where a resolution is required through IBC process. You will be shortly hearing about it.”

Jaitley said though PSB consolidation was not on the meeting’s agenda, “We are actively moving in that direction. I can't give you further details as these are price-sensitive information. But you can take it that there is movement in that direction.”

The meeting also reviewed all financial inclusion schemes, the Stand Up India initiative, cyber-security and Goods and Services Tax-related issues.