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Relief Measures by Banks in Areas Affected by Drought - One time Waiver
of Interest on Kharif Crop Loans
RPCD. NO. PLFS.BC. - 56 - 05.04.02(DROUGHT)- dated 27th
December 2002
Please refer to our circular RPCD. NO. PLFS. BC./ 46 / 05.04.02
(DROUGHT)/ 2002-2003 dated November 15, 2002 regarding guidelines for relief
measures by banks in the districts notified by the State Governments as drought
affected.
2.
Banks were advised:
(i)
not to recover any amount either by way of principal or interest during
the current financial year in respect of Kharif crop loans,
(ii)
to convert the principal amount of crop loan into term loan to be
recovered over a period of minimum five years in the case of
small and marginal farmers and four years in the case of other farmers,
(iii)
to defer interest due in the current financial year on crop loan and not
to charge interest on the deferred interest.
3.
In order to further mitigate the hardship of the farmers in the drought
affected States, it has been decided by the Government of India, to waive
completely, the first year's deferred liability of interest on Kharif loans, as
a one-time measure. Such farmers who have availed of Kharif crop loans shall be
entitled to obtain an endorsement of this waiver directly from the loaning bank.
4.
Commercial banks are, therefore, advised to defer the interest due in the
current financial year on Kharif crop loans in such a way that the first
installment of interest repayment would be 20% of the deferred interest. This
installment of deferred interest, which is to be waived by banks as per
Government announcement, will be reimbursed by Government of India. This would
be applicable in the case of all farmers. The balance amount of the deferred
interest may be recovered in reasonable installments thereafter. It may be
reiterated that no interest should be charged on the deferred interest. The
modalities of reimbursement would be advised to banks in due course in
consultation with the Government of India.
5.
Other instructions contained in our guidelines, circulated under cover of
circular RPCD. NO. PS. BC. 6/ PS.126-84 dated August 2, 1984 read with circular
RPCD. NO. PLFS. BC. 128/ 05.04.02/ 97-98 dated June 20, 1998, remain unchanged.
6.
We shall be glad if you will please take immediate action to provide
relief as above to the farmers affected by drought.
Please acknowledge receipt.
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