Business Standard

Monitor end-use of subsidised crop loans, banks told

Related News

The Reserve Bank of India (RBI) said banks have failed to ensure the end-use of funds disbursed as crop loans and some borrowers were diverting such loans for other purposes.

has asked banks to strictly monitor end-use of under the and make sure these are not used for any other purpose. RBI cautioned banks that crop loans not meeting this criteria will not be considered as agricultural loans.

The central bank also asked banks to ensure that the borrower is a farmer and the rate of interest charged did not exceed seven per cent.

The interest rate is stipulated by the government and it gives the subvention of three per cent on timely payment by farmers, thereby effectively making the interest rate at four per cent.

The banking regulator further said that there have been reports of borrowers of cheap crop loans diverting the funds for other purposes such as investing in fixed deposits and other investment avenues that accrue higher interest rates.

According to banking sources, the is prevalent particularly in Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.

Read more on:   
|
|
|
|
|

Read More

Festive season brings cheer for banks in retail credit

The reduction in interest rates by banks in home loans has finally helped banks to garner a higher month-on-month growth this year in the festive ...

Quick Links

More news from Finance Rss icon

Bank credit dropped in 1st half of October

Though credit demand has been tepid for several quarters, this fortnightly dip came just ahead of the Diwali week, the main festive season for ...

Rajan rate-cut bets spur Asia's biggest swap drop

The fixed payment to lock-in rates for a year using the derivatives fell 37 basis points this month, the most since September 2013, to 8.10%

YES Bank enters home loan business

Move follows RBI's decision to allow banks to raise long-term resources to finance affordable housing

Back to Top