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Indian farm loan waivers add to banking sector bad-debt woes

Experts expect agricultural write-offs to affect food supply, credit culture

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Farmers work in a paddy field in Kothari village, in the northeastern state of Assam, India.   © Reuters

MUMBAI -- Indian banks, already burdened with high corporate bad debt, face another threat to their balance sheets as state governments announce farm loan waivers to placate small and marginal farmers.

The western state of Maharashtra, which has some 3.5 million farmers, is the latest to announce waivers worth around 300 billion rupees ($4.65 billion). The local government capitulated after massive protests lasting weeks.

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