Press Information Bureau

Government of India

Ministry of Finance

16-December-2011 19:04 IST

In order to provide relief to bank borrowers in times of natural calamities, Reserve Bank of India has issued standing guidelines to banks. These are as under:

a) conversion of the principal amount outstanding in the crop loans and agriculture term loans as well as accrued interest thereon into term loans.

b) conversion/rescheduling loans and the interest accrued thereon for periods ranging from 3 to 10 years depending upon the frequency of crop failures/intensity of damage to crops;

c) fresh crop loans for affected farmers;

d) treatment of converted/rescheduled agri-loans as ‘current dues’;

e) non-compounding of interest in respect of loans converted/ rescheduled etc;f) relaxed security and margin norms;

g) provision of consumption loans to agriculturists whose crops have been damaged ; and

h) moratorium period of at least one year, while restructuring. In the State of Tamil Nadu, under the Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS), 2008, Regional Rural Banks and Cooperative Banks have provided Debt Waiver and Debt Relief to 1.51 lakh farmers account to the extent of Rs. 216.07 Crore.

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

DSM/Hb

Loan restructuring guidelines enable conversion and rescheduling of agricultural loans to provide relief and fresh credit to affected farmers. Standing guidelines allow banks to restructure agricultural credit after calamities by converting outstanding principal and accrued interest into term loans; rescheduling loans and accrued interest for three-to-ten year periods based on crop failure severity; providing fresh crop and consumption loans; treating restructured loans as current dues; prohibiting compounding of interest on restructured accounts; permitting relaxed security and margin norms; and allowing at least a one-year moratorium during restructuring.