Banks and Disaster Relief https://www.cenfa.org/banks-and-disaster-relief/ Kerala Bank has to be congratulated for declaring that the loans given in the affected areas will be written off. Co-operative Banks will do the same. ..
the State Level Bankers Committee announced that the individual bank boards would take a call on the write-off. The loan outstanding in the area is only Rs. 32 crores, out of which the Housing Loans and Vehicle Loans are backed by insurance. The MSME loans including MUDRA loans should have a credit guarantee which can be claimed.
It is astonishing that almost one month has passed but no Bank board has announced the write-off. The Banks may be in a dilemma that similar demand will come during other disasters too. Yes, it will come. Banks may also be waiting for the Finance Ministry’s approval as Finance Ministry and RBI representatives are on every board. The Finance Ministry may think that opposition-ruled states should not be supported.
When banks could write off Rs. 25 lakh crore in the last 10 years, especially to the corporates, when the average haircut in National Company Law Tribunal referred cases is 67%, the banks should be generous in writing off loans of people in such disasters.
Banks should use this as an opportunity to give fresh loans to the affected people, spend their Corporate Social Responsibility funds for infrastructure funds and show that they are fulfilling their social responsibility.