Odisha has objected to a recent Reserve Bank of India (RBI) decision to increase the interest rates for loans provided under Rural Infrastructure Development Fund (RIDF), including past loans.
In a letter addressed to the Union finance minister, Pranab Mukherjee, chief minister Naveen Patnaik said, the rate hike is a violation of terms and conditions for availing loans in the previous fiscal.
The RBI has hiked the interest rates from 6.5 per cent to 8 per cent per annum from this April for all loans provided from RIDF, which also became applicable to all past loans
Odisha protested the rates hike as it has taken Rs 12,634 crore loan from National Bank for Agriculture and Rural Development (Nabard) on July 26, 2011, when the interest rate was 6.8 per cent. The state government said that since there was no mention of further rate hike at the time of loan sanction, it was clear that the loans carried a fixed interest rate and not a floating one.
All loans carried under RIDF upto January 2012 actually carried those standard terms and conditions, Patnaik said in the letter citing that the recent RBI decision is a breach of conditions mentioned in the loan sanction papers. “In the view of the matter, the recent decision of the RBI to revise the rate of interest in respect of past loans is a clear breach of the terms and conditions of those loans. Accordingly, I would urge you to persuade the RBI and Nabard to review the issue urgently and to ensure that the revised rate of interest of 8 per cent is not made applicable to the RIDF loans sanctioned prior to April 1, 2012,” the letter said.