ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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The Loan Waiver Scheme

Rural India needs a strategy that strengthens the credit structure, increases the number of bank branches and establishes sound relationship banking. Even as banks are encouraged to increase their rural commitments, an essential aspect of the incentive structure for the banking system should be an assured recovery process. A socio-political environment that nurtures expectations of a loan waiver is not conducive for building a healthy financial system, particularly in rural areas where borrowers have weak bargaining power and bank officials are known to be reluctant to lend at the smallest sign of a poor recovery.

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