The Reserve Bank of India (RBI) in a communication to the Andhra Pradesh Government has informed its decision to reschedule crop loans in four districts of the State, however, with certain conditions.
The letter addressed to State Chief Secretary, IYR Krishna Rao, by the Executive Director of the Bank, stated, “We are agreeable to allow reschedulement of some farm loans.”
However, based on normative criteria, rescehdulement would be restricted to the four districts of Srikakulam, Vizianagaram, Nellore and Krishna and only cover loans extended by Commercial banks, cooperative banks and RRBs.
Further, it stated this would only include short-term production loans and would exclude crop loans taken against gold and loans for allied activities.
While laying down certain conditions, it said the reschedule would be subject to certain conditions and that advances against pledge or hypothecation of agricultural produce other than standing crop, tied loans, closed crop loan accounts would not be eligible.
The reschedulement would be limited for a period of three years, comprising one year moratorium and two years’ reschdulement. Banks will not forgo the right to recovery from farmers if the loan remains overdue, after the period of three years has lapsed.
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, 2014 or Rs 1 lakh per farmer, whichever is lower.
Where the amount is paid by the Government, the Bank said it must be deposited in cash directly in the farmers’ account.
The letter states that the Bank had taken 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 impaired.
This relates to last year’s Kharif crop and covers only four districts of the 13 districts in the State. The AP Government will still have to contend with other districts and is also looking at waiver of loan worth about Rs 45,000 crore.