The Reserve Bank of India has finally agreed for rescheduling of crop loans for which the Andhra Pradesh government lobbied hard but with several riders that include restricting the coverage to “some farm loans” in four districts and not including those taken against gold.
In a letter sent to the Chief Secretary, I. Y. R. Krishna Rao on August 7, the RBI further restricted the relief only to short-term production loans extended by commercial, cooperative and regional rural banks in the four districts of Srikakulam, Vizianagaram, Nellore and Krishna which it said, was based on normative criteria. Loans taken for allied agriculture activities would not be eligible.
The other loans not eligible for “crop loan scheme for reschedulement” include advances against pledge or hypothecation of agriculture produce other than standing crop, “tied loans” and closed crop loan accounts. The reschedulement will be limited to a period of three years, comprising one -year moratorium and two years reschedulement.
The RBI has also made it clear that the banks will not forego the right to recovery from farmers if the loan remains overdue after the lapse of three years.
The eligible amount for reschedulement would be limited to the amount of crop loan together with applicable interest which is disbursed between April and October 2013, as of March 31 or Rs. 1 lakh per farmer, whichever is lower.
Where the amount is paid by the government , it must be deposited in cash directly in the farmer’s account.
The RBI said it had taken a “considered and sympathetic” view to enable unimpeded flow of credit to the farmers in the ongoing kharif season and to ensure that the present agricultural operations are not hampered.
