Mumbai : The Reserve Bank of India (RBI) Friday advised public sector banks to write off farmers’ loans even if they failed to fully pay the stipulated 75 percent of the total loan amount.
Under the debt relief scheme, launched in the 2008-09 budget, banks were allowed to write off up to 25 percent of farmers’ loans if they pay 75 percent of their debt.
“Banks and lending institutions are allowed to receive even less than 75 percent of the eligible amount under OTS (one-time settlement), provided the banks and such institutions bear the difference themselves and do not claim the same either from the government or from the farmer,” RBI said in a circular issued to other banks.
“The government will pay only 25 percent of the actual eligible amount under debt relief,” it added.
The country’s central bank further said banks would be allowed to receive the payment of the outstanding amount in one tranche instead of three instalments as was decided earlier.
“The government of India has now decided to make the accounts of ‘other farmers’ eligible for a debt relief of 25 percent even if they pay their entire share of 75 percent as one single instalment, provided the same is deposited by such farmers till June 30, 2009. The banks will not charge any interest on the eligible amount till June 30, 2009,” the RBI circular said.
“Other farmer” means a farmer cultivating (as owner or tenant or share cropper) agricultural land of more than 2 hectares.
The apex bank has also extended the deadline of the first instalment from Sep 30, 2008, to March 31, 2009.
However, the deadlines of the remaining two instalments were kept unchanged at March 31, 2009, and June 30, 2009.