Lender cites high bad loans for drastic move in two States; Marathwada, Vidarbha to be impacted
Mumbai: In an unusual move, a state-run lender, Bank of Maharashtra, has decided not to extend loans in eight zones in Maharashtra and Madhya Pradesh that include Aurangabad, Latur, Akola, and Amravati, which are hit by drought.
The bank cited high bad loans from agricultural advances in the branches of these zones for the decision. The other zones are Solapur and Jalgaon in Maharashtra and Bhopal and Jabalpur in Madhya Pradesh.
“The present condition of agriculture is pathetic, wherein gross NPAs under agriculture stood at 18.36%,” the bank said in a circular to the branches. A copy of the circular has been reviewed by The Hindu. The bank had seen fresh slippages of Rs.1,300 crore during 2018-19 from agriculture loans.
“It is observed that eight zones/its branches are having high % [percentage] of agri NPAs which are identified for curative action on NPA management,” the circular said.
Remedial action
The remedial action, as suggested by the ‘top management’, says, “Branches having NPAs > 15% shall not sanction new/enhancement proposals under agriculture.”
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