6 more months to repay farm loan
Govt grants this relief to farmers in view of drought in many parts of the country.
The government has further relaxed the farm loan relief scheme which was announced in the Budget of 2008-09.
In the wake of deficient rain, farmers have been given another six months - up to December 2009 - to pay 75 per cent of the outstanding amount and avail of the 25 per cent settlement. Originally, farmers had to pay their share in three installments of 25 per cent each, starting June 2008. Subsequently, they were allowed to clear the entire amount in one installment.
In addition, farmers have been exempted from paying interest on the outstanding amount for the period February 29, 2008, to June 30, 2009, the Reserve Bank of India said in a circular issued this evening. “However, banks may charge normal rate of interest on the eligible amount from July 1, 2009, up to the date of settlement,” it added said.
RBI has said that banks might treat loans as performing assets in case the farmers covered under the Debt Relief Scheme agreed to pay their share under the OTS, if adequate provision was made by the banks for the loss in present value terms for all the receivables due from the borrowers. In case payments were delayed by the farmers beyond December 31, 2009, the outstanding amount should be treated as non-performing asset (NPA), RBI said.
“The asset classification of such accounts shall be determined with reference to the original date of NPA. On such downgrading of the accounts, additional provisions as per the extant prudential norms should also be made,” the central bank said.
While the deadline was extended up to June 30 on account of deficient rain, sources said, it was extended further as many states had declared a drought in a large number of districts. In terms of the area involved, nearly half the country is facing a drought, based on declarations made by state governments.
The latest announcement comes just ahead of elections in states such as Maharashtra and Haryana, which have a sizeable population dependent on the agricultural sector. The Rs 71,000-crore farm loan relief scheme, which also entailed banks writing off loans, was implemented a in the run-up to the general elections.