The Uttar Pradesh government's Rs 36,359 crore farm loan waiver has turned the spotlight on the steadily rising non-perfor ming assets (NPAs) from this sector over the past few years as it has revived concerns about possible vitiating of the credit environment in rural India with other state government's also likely announcing similar waiver.

NPAs from agriculture and related activities have steadily increased from 3.3% of the total banking loans to the sector in March 2011 to 6% in September 2016, according to the RBI's Financial Stability Report released in December 2016. Some bankers attribute this rise to the periodic loan waivers by politicians which have vitiated the repayment culture in rural areas.

Indeed agriculture NPAs for all large state-owned banks have risen in the past six years. SBI's NPAs have risen from 3% of loans in March 2010 to 6% in March 2016, while Canara Bank BSE 0.94 %'s NPAs from the sector have increased to 3.21% in March 2016 from 1.84% in March 2010.

Punjab National Bank BSE 0.00 %'s NPAs have increased to 6% from 3.65%, while Bank of Baroda's NPAs have risen the sharpest to 10.74% from 3.33%. Fears are that other state governments may also follow the UP path.

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