Rbi Eases Norm For Agri Advances

The Reserve Bank of India (RBI) has relaxed the delinquency norm for agricultural advances made by commercial banks. Earlier this norm was applicable only to short-term agricultural crop loans but now the central bank has made it applicable to all the direct agricultural advances.

The central bank, through a circular on prudential norms on income recognition, asset classification and provisioning for the agricultural advances issued in June 2001, had advised the banks that the norm of two harvest seasons, not exceeding two half years, for reckoning non-performing assets (NPAs) should be made applicable only in respect of short-term agricultural loans for production and marketing of seasonal crops such as paddy, wheat, oil seeds, sugarcane etc.

In respect of financing other activities such as horticulture, floriculture or allied activities such as animal husbandry, poultry farming, identification of the non-performing asset would be done as in the case of other advances.

Direct finance to farmers for agricultural purposes includes purchase of agricultural implements and machinery; development of irrigation potential through construction of tube wells, tanks, purchase of oil engines/installation of electric motor & pumps and construction of field channels/lift irrigation/installation of sprinkler irrigation system.

Further it includes, reclamation and land development schemes (bundling of farm lands, conversion of dry paddy lands into wet irrigable paddy lands, wasteland development), construction of farm buildings and storage facilities, production and processing of hybrid seeds for crops, payment of irrigation charges.

In respect of agricultural loans, other than those specified, identification of NPAs should be done on the same basis as non-agricultural advances which, at present, is the 180 days delinquency norm, the RBI said in a circular to all banks.