What changed
The Union Government approved a relief package for debt-stressed farmers in 25 specified districts. RBI now mandates UCBs to waive entire overdue interest as on July 1, 2006, and reschedule overdue principal over 3-5 years with a one-year moratorium. Banks must also ensure fresh credit flow as per state-wise allocations by SLBC Convenors.
What it means for you
UCBs in these districts must immediately identify and restructure overdue farmer loan accounts, waiving entire interest to make farmers eligible for fresh loans. The interest waiver cost is shared equally by state and central governments, with reimbursement claims to be submitted via SLBC Convenors and RBI Regional Offices using Annex I. Banks must maintain detailed branch-wise records (Annex II) for audit and inspection.
What you must do
- Identify all farmer loan accounts overdue as on July 1, 2006 in the 25 specified districts and reschedule principal over 3-5 years with a one-year moratorium.
- Waive the entire overdue interest as on July 1, 2006 for these accounts and ensure fresh finance to eligible farmers.
- Submit state-wise interest waiver claims to the respective SLBC Convenor and RBI Regional Office using Annex I format.
- Maintain branch-wise data as per Annex II at head office for RBI inspection and state government audit.
- Coordinate with SLBC Convenor for allocation of the total credit flow target for 2006-07.
Who it affects
Primary (Urban) Co-operative Banks in Andhra Pradesh, Karnataka, and Kerala, All Multi State Primary (Urban) Co-operative Banks, Farmers in the 25 debt-stressed districts listed in the circular
Which districts are covered under this relief package?
16 districts in Andhra Pradesh (Prakasam, Guntur, Nellore, Chittor, Cuddapah, Anantapur, Kurnool, Adilabad, Karimnagar, Khammam, Mahabubnagar, Medak, Nalgonda, Nizamabad, Rangareddy, Warangal), 6 in Karnataka (Belgaum, Hassan, Chitradurga, Chikmagalur, Kodagu, Shimoga), and 3 in Kerala (Wayanad, Palakkad, Kasaragod).
How is the interest waiver reimbursed?
The interest waiver cost is shared equally by the state and central governments. Banks must submit state-wise claims to the SLBC Convenor and RBI Regional Office using Annex I format, and maintain branch-wise records as per Annex II for audit.
What is the credit flow target for 2006-07?
The package ensures credit flow of Rs. 13,817.78 crore in Andhra Pradesh, Rs. 3,076.20 crore in Karnataka, and Rs. 1,945.07 crore in Kerala for the affected districts. SLBC Convenors will allocate these amounts among banks.