IBA scripts farm sector relief

The Indian Bank Association (IBA) has finalised three schemes for farm sector lending.

They are a one-time settlement (OTS) scheme for small and marginal farmers, a scheme for providing relief to farmers in arrears and a scheme outlining relief measures for those farmers who are indebted to non-institutional lenders.

"The model schemes to provide relief to farmers has been issued to all banks however its implementation depends on the respective bank boards," said IBA, chairman, V Leeladhar.

The details of the scheme will be released to the farmers in August, he added. He was speaking on the sidelines of a press conference organised in Mumbai to mark the National Bank For Agriculture and rural Development (Nabard) foundation day.

The OTS scheme will cover all loan accounts sanctioned to small and marginal farmers, which are in default as on June 24, 2004.

For accounts declared as non- performing assets (NPAs) in the banks books as on March 31, 2001, the settlement amount will be the balance outstanding in the loan account as on March 31, 2001. The interest rate on the balance outstanding after March 31, 2001 will be waived.

In deserving cases, banks may consider recovering the settlement amount in installments with down payment of at least 25 per cent to be paid at the time of settlement.

The balance amount should be recovered within one year from the date of settlement.

The second scheme is for providing relief to farmers in arrears. This scheme covers only those farmers affected by natural calamities in areas notified as calamity affected by the concerned state governments.

As per the scheme the outstanding in crop loans and agricultural term loans as on March 31, 2004 along with interest accrued will be converted into a term loan re-payable over a period of five years with an initial moratorium of two years.

In respect of term loan account where existing repayment schedule stretches beyond the period suggested for repayment of restructured loans under the scheme, only overdue interests and overdue instalments will be included in the restructured term loan.

The repayment commitments in respect of instalments, which have fallen due, will continue as originally scheduled.

The third scheme relief measures for farmers indebted to non-institutional lenders is aimed to mitigate acute distress faced by farmers due to heavy burden of debt from non-institutional lenders.