Nabard Sets Mar 31 Cut-Off Date For Npa Settlement

The National Bank for Agriculture & Rural Development (Nabard) has set the cut-off date for one-time settlement of non-performing assets (NPAs) in the co-operative sector (excluding the primary co-operative banks) as on March 31, 1998.

The Reserve Bank of India (RBI), which had last year come out with a one-time settlement scheme for NPAs in the public sector banks, recently finalised certain broad guidelines for one-time settlement of chronic NPAs in the co-operative banks. Nabard has, in turn, issued circulars to cooperative banks and state governments in this regard.

The cut-off level for NPAs for individual borrowers has been fixed at Rs 5 lakh per individual borrower and for institutional borrowers, it has been fixed at Rs 5 crore.

 

The NPAs in all the sectors except willful defaults, frauds, loans with tie-up arrangements, loans guaranteed by government and loans under government-directed programmes like PDS, will be covered.

The settlement formula envisages the minimum amount to be recovered would be the entire outstanding balance in the account, inclusive of interest as on the date on which the account was categorised as doubtful /loss NPAs.

In cases where the NPAs have been classified as sub-standard as on March 31, 1998, but had become doubtful or loss subsequently, the borrowers will have to pay interest at 12 per cent from the date when the loan account was classified as sub-standard till the date of final payment.

Nabard has also said the amount of settlement should be preferably recovered in one lumpsum or atleast 25 per cent upfront and the balance within one year along with interest at 12 per cent up to the date of final payment.

The settlement scheme will remain operative up to March 31, 2002, and the proposals received should be processed and decisions have to be taken before June 30, 2002. Nabard has also advised individual banks to evolve separate schemes for one-time settlement of NPAs over and above the cut-off period and levels.