Union Finance Minister Arun Jaitley has directed commercial bank chiefs to focus their attention on rural India’s cash crunch over the next 40 days, with a war chest of Rs. 35,000 crore for providing credit to farmers by December.
The Centre also relaxed its demonetisation policy for high-value currency further by allowing farmers to buy seeds for the rabi sowing season using Rs. 500 notes.
Mr Jaitley asked banks to provide Rs 5,000 crore to the currency chests of district central co-operative banks (DCCBs) to ensure that the farming community faces no cash shortages for the rabi crop.
Separately, the Reserve Bank of India eased the asset classification norms for loans of less than Rs 1 crore to allow small businesses, home loan borrowers and farmers 60 more days to pay instalments that fall due in November and December, to prevent them from being classified as non-performing assets owing to the ongoing cash crisis.
RBI notification
The RBI issued a notification to operationalise the Centre’s announcement last Thursday that farmers will be allowed to withdraw up to Rs 25,000 a week from their loan or deposit accounts, including kisan credit card limits.
The central bank also allowed firms to withdraw up to Rs 50,000 a week from their cash credit accounts to continue their operations, in line with the limit set for current accounts and traders registered with agriculture produce marketing committees (APMC) .
However, the RBI is yet to notify another relaxation announced for farmers last Thursday, allowing withdrawal of Rs 25,000 a week against payments received in their bank accounts against sales of their kharif season produce in APMC mandis.
“To further support farmers for the current rabi crop, the government has decided to allow farmers to purchase seeds with the notes of Rs 500 from the centres, units or outlets belonging to the central or State Governments, public sector undertakings, national or State Seeds Corporations, central or State agricultural universities and the Indian Council of Agricultural Research (ICAR), on production of proof of identity,” the Finance Ministry said in a statement.
'It's better late than never'
While welcoming the Finance Ministry’s moves to ease curbs on farm credit and allow use of old notes for purchase of seeds, Bharat Krishak Samaj chairman Ajay Vir Jakhar said it may not be sufficient as the private sector has a substantial share of the total seed sales in the country.
Agriculture expert and a member of Uttar Pradesh Planning Commission Sudhir Panwar told The Hindu that this decision should have come earlier. “It's a delayed decision by the Central government but still, it's better late than never,” he said, stressing that farmers should have been exempted from the “demonetisation” decision.
“Over the last 13 days, farmers have lost crucial time,” he said.
