Interest Relief for Farmers: Kharif & Rabi 2005-06 Crop Loans

RBI/2005-06/319 RPCD.No.PLFS.BC.66/05.04.02(Kharif-05)/2005-06 March 09, 2006 All Scheduled Commercial Banks Dear Sir, Union Budget 2006-07 - Guidelines for Relief to Farmers 1. Paragraph 48 of the Union Budget Speech envisages grant of interest relief of two percentage points in the interest rate on the principal amount upto Rs1 lakh on crop loans availed by the farmers for Kharif and Rabi 2005-06.  The amount of the relief is required to be credited to the borrower's account before March 31, 2006. 2. It has been decided that banks may first credit the proposed relief to the farmer's account before March 31, 2006 and thereafter seek reimbursement. 3. Banks may work out the interest relief on the following basis: (a) All crop loans for Kharif & Rabi disbursed to farmers during the financial year 2005-06 will be eligible for the interest relief of two percentage points.  However, where each crop loan exceeds Rs.1 lakh, the interest relief will be applicable on the principal amount up to Rs.1 lakh only. (b) Interest relief may be calculated at two percentage points, on the amount of the crop loan disbursed from the date of disbursement/drawal up to the date of payment or upto the date beyond which the outstanding loan becomes overdue i.e. 31 st March 2006 for Kharif and 30 th June 2006 for Rabi, respectively, whichever is earlier. 4. For this purpose, the banks may submit their claims in the format given in Annex I to the Chief General Manager-in-Charge, Rural Planning and Credit Department, Reserve Bank of India, Central Office, Mumbai. Information with respect to crop loans disbursed and interest relief claimed (branch-wise) may be maintained in the format given in Annex II at the Head Office for the purpose of audit and RBI inspection. The format for the branches to provide information on relief to their Controlling Office/Head Office is given in Annex III. 5. It is clarified that banks can also furnish their claims to the Reserve Bank in installments, as convenient to them. Banks will be reimbursed their claims by way of credit to their accounts with RBI within one month of the date of receipt of the claim. The claims submitted by banks shall be subject to audit/RBI inspection subsequently. 6. For audit purposes all claims may be certified by the statutory auditors and certificates submitted before 30 th June 2006 to the Chief General Manager-in- Charge, Rural Planning and Credit Department, Reserve Bank of India, Central Office, Mumbai.  7 Please acknowledge receipt. Yours faithfully, (G.Srinivasan)                                                                                          Chief General Manager ANNEX I Certificate for claiming Subsidy Name of Bank: (Amounts in Rupees) Crop Loan Amount Disbursed

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/319 · issued 09 Mar 2006. The plain-English explanation above is BankPulse’s own independent summary.

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