What changed
RBI issued guidelines for UCBs to provide relief to poultry industry borrowers hit by avian influenza. Banks must convert unpaid principal and interest on working capital and term loans (due after Dec 31, 2007) into term loans with up to three-year repayment and one-year moratorium. Rescheduling must be completed by April 30, 2008, and converted loans treated as current dues.
What it means for you
UCBs must proactively restructure poultry loans to prevent defaults due to bird flu losses. This allows borrowers to resume operations with fresh finance after conversion. Banks need to assess cash flows for moratorium and repayment schedules, ensuring compliance by the April 30 deadline.
What you must do
- Identify all poultry industry accounts classified as standard as on Dec 31, 2007.
- Convert overdue principal and interest on working capital and term loans into term loans with up to three-year repayment and one-year moratorium.
- Complete rescheduling or conversion by April 30, 2008.
- Treat rescheduled or converted loans as current dues and extend fresh need-based finance to eligible borrowers.
Who it affects
Primary (Urban) Co-operative Banks, Poultry industry borrowers with standard accounts as of Dec 31, 2007
Which accounts are eligible for these relief measures?
Only poultry industry accounts that were classified as standard as on December 31, 2007, are eligible.
What is the deadline for completing the conversion or rescheduling?
All rescheduling or conversion must be completed on or before April 30, 2008.
Can borrowers get fresh loans after conversion?
Yes, after conversion, borrowers are eligible for fresh need-based finance from the bank.