Bank Farm Loan Norms Altered

The Reserve Bank of India has set aside the changes made by it in the guidelines for the classification of agricultural advances in February this year. It has clarified that these changes, which were to be applicable for the financial year ending March 31, 1997, would now be brought into application only in thecurrent fiscal.

The Reserve Bank had, in February, suggested in a circular to the heads of all public sector commercial banks that in respect of advances granted for agricultural purposes where interest and/or instalments is in arrears for more than two quarters from the date the interest and/or instalment are due for repayment, the advance should be treated as a non-performing asset.

 

These new guidelines were expected to be taken into consideration by all commercial banks while preparing the balance sheets for the year ended March 31, 1997.

Earlier, RBI had advised banks that in respect of advances granted for agricultural purposes, if interest has not been paid for more than two seasons of harvest