Press Information Bureau

Government of India

Ministry of Finance

22-August-2012 17:22 IST

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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DSM/RS/Hb

Loan restructuring for agricultural borrowers permits conversion to term loans with moratorium and relaxed security norms. RBI guidelines allow conversion of outstanding principal and accrued interest on crop and agricultural term loans into term loans with tenor based on crop damage frequency/intensity; converted/rescheduled agri-loans are to be treated as current dues, interest on restructured loans is not to be compounded, and at least a one-year moratorium must be provided. The measures include relaxed security and margin norms and fresh crop and consumption loans for affected farmers, and accounts restructured due to natural calamities retain their asset classification so that a once-restructured standard asset is not treated as a second restructuring.