Banks to recast crop loan in flood-hit areas

Stress is on converting short term loans to medium term loans at 5% pa, 2% pa for farmers

Commercial banks have agreed to restructure crop loans of farmers in areas hit by the Phailin cyclonic storm and the subsequent floods that has inundated huge tracts of cultivable land.

At a special meeting of the State Level Bankers’ Committee (SLBC), U N Behera, additional chief secretary (finance) stressed on conversion of short-term loans to medium-term loans at five per cent interest rate. For farmers with good repayment record, the interest rate will be two per cent. This, he felt, would enable the farmers to avail fresh crop loan in the wake of recent cyclone and floods. Behera urged the commercial banks, regional rural banks and cooperative banks to restructure existing loans at affected areas as per Reserve Bank of India’s (RBI) guidelines. Banks should also stress on sanctioning fresh loans for the affected farmers to help resume normal business, he added. Besides, he advised the banks to focus on crop finance for the Rabi season and meet the annual credit target for the agriculture and allied sectors in 2013-14.

Behera suggested that SLBC may write to all lead district managers for conducting meetings at the district level within a week to assess the areas affected by cyclone and floods.

The finance department has asked the banks to implement RBI guidelines with respect to rehabilitation package for micro, small and medium enterprises (MSMEs).

The fisheries department has urged the bankers to provide minimum of Rs 20,000 per boat under DRI (differential rate of interest) loan scheme at concessional rate of four per cent interest for repairing damaged boats.

It was also decided to expedite credit delivery to the affected people through organising of special camps by the government line departments in coordination with the banks.

Besides, monthly review meetings will be held at the state as well as district level to ensure close monitoring of implementation of relief and rehabilitation measures.

Banks have been asked to issue necessary instructions to the branch level functionaries for implementation of decisions taken at the special SLBC meeting.