Loan waivers have a precedent. In 2008, the central government announced a ₹52,500 crore farm loan waiver amid severe rural distress, ahead of the 2009 general elections. The government had compensated all banks (public and private) back then, regardless of the quantum of exposure. So, it is not that only PSU banks are asked to bear the burden. Almost 50% of the waived amount in 2008 was released to the affected banks in the same calendar year, with the remainder paid over the next four years. Therefore, banks may incur some loss in the net present value of the loans, but not on the outstanding loan amount.
