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Moral Hazard While The Writing Away From Indian Farm Loans

Moral Hazard While The Writing Away From Indian Farm Loans

Yet we do have that slight dilemma of moral risk. If individuals genuinely believe that a loan will not need to be paid back they’re actually instead prone to just simply just take a loan out. Further, then there will be agitation for those who can repay not to have to if people see those who just cannot repay a loan getting them forgiven. That is certainly just what we are seeing that this really good piece details:

The write-off of farm loans in Uttar Pradesh and Maharashtra appears to be encouraging farmers in other states to quit trying to repay their farm loans to make certain that they are going to obtain the advantages of any farm loan waiver system inside their state. This has resulted in a razor-sharp upsurge in farm loan defaults for Indian banking institutions. Continue reading

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