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:   
|
|
|
|
|

Monitor end-use of subsidised crop loans, banks told

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.

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.

image

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 ...

Recommended for you

Quick Links

More news from Finance Rss icon

Irdai group to explore opportunities in insurance e-commerce

The two groups will look into identifying opportunities of e-commerce in insurance sector

Doha Bank eyes India exposure at $5 billion in three years

The bank has three branches in the country at Mumbai and Kochi and is also planning a subsidiary in India to scale up its operations here

HDFC Life eyes 15% growth in new business premium

Company banks on two recently launched products; collects Rs 3,310 cr new business premium in 2014-15 with 10% growth

Back to Top