The drought conditions in Himachal this year have led to an increase in non performing assets (NPAs) in Agricultural loans of all banks. The bad loans touched a record high of 30 percent in June 2009.

The NPA in agriculture sector as on March 2009 remained at 9 percent, higher than the net NPA of the state at 4.55 percent. Though the net NPA as on June 2009, came down to 4.06 percent, NPA's in agriculture sector increased to a whopping 30 percent.

The crop loans extended during the Kharif season till June 2009 amounted to 178.14 crore. Of the Rs. 550-crore outstanding loans, only Rs. 419 were recovered.

"Chief Secretary Asha Swaroop discussed with the bankers the possibilities of restructuring the current loans. It has also been decided to hold a special meeting of the state sub-committee headed by the finance secretary of Himachal Pradesh to discuss drought relief and recovery shortfall, in which banks can help," said S K Goel, Chief Managing Director, UCO Bank.

Goel held the drought conditions in the state responsible for such a high rate of bad loans. He said that it was surprising that the insurance coverage in Himachal was just 10 percent as compared to 60 percent in other states.

The state government has already announced to waive land revenue for farmers in the 12 drought hit districts.