Wednesday, 22 August 2012

Assessment of Agricultural Loan Burden

In order to provide relief to bank borrowers in times of natural calamities, Reserve Bank of India (RBI) has issued standing guidelines to banks. The relief measures, inter alia, include conversion of the principal amount outstanding in the crop loans and agriculture term loans as well as accrued interest thereon into term loans for period ranging from 3 to 10 years depending upon the frequency of crop failures/intensity of damage to crops; treatment of converted/rescheduled agri-loans as ‘current dues’; non compounding of interest in
respect of loans converted/rescheduled; moratorium period of at least one year, while restructuring; relaxed security and margin norms; fresh crop loans and consumption loans for affected farmers. It has also been clarified that the accounts that are restructured for the second time or more on account of natural calamities would retain the same asset classification category on restructuring. Accordingly, for once restructured standard asset, the restructuring necessitated on account of natural calamity would not be treated as second restructuring, i.e., the standard asset classification will be allowed to be maintained 

This information was given by the Minister of State for Finance, Shri Namo Narain Meena, in written reply to a question in Lok Sabha today. 

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