RBI has allowed banks to extend loan restructuring facility, under which borrowers will get a three-year repayment window, to a very limited number of crop loan borrowers in Andhra Pradesh and Telengana.
The RBI informed the state governments on Friday that borrowers in about 100 mandals (local administrative units) in three districts of Telangana and 120 mandals in four districts of Andhra Pradesh would get a three-year repayment window. This includes the moratorium on loan repayment in the first year.
The central bank said the facility would be available only for crop loans taken between April and October last year and only up to Rs 1 lakh per account, including the interest.
Confirming the development, Telangana Chief Secretary Rajiv Sharma said he would anyway welcome the decision of RBI since the state government is soon coming out with its own loan waiver policy to take care of the rest of the farmers in Telangana. "The RBI followed its own criteria and confined the loan restructuring facility to only three of the nine districts we had proposed," he told Business Standard.
The Andhra Pradesh government had requested the RBI to recast crop loans in 570 mandals of the 653 mandals in the state. The Telangana government had sought rescheduled crop loans in 415 of its 475 mandals. The loan recast facility is now available to less than a quarter of all the mandals the two states had declared as hit by calamity.
Earlier, the central bank had turned down requests for crop loan restructuring in these states, claiming yield data in the affected areas did not warrant it.
RBI Governor Raghuram Rajan earlier this week said that relief would only be provided in areas where crop yields were less than half the normal. The RBI also refused to extend the repayment period beyond three years despite the states wanting more time.
"It is good that at least in some areas banks will resume lending to farmers following the RBI's decision," said a senior official in the Telangana government who did not wish to be named. In the rest of the mandals, the state government would have to take over farmers’ existing loans so that they could get new ones, he added.
The Telangana and Andhra Pradesh governments have, respectively, announced waivers of Rs 19,000 crore and Rs 43,000 crore of farm loans. The state governments were awaiting the RBI’s decision on delayed repayments before going ahead with their waivers.