Home › Circulars › RBI/2008-09/189

Floating Provisions for Agri Debt Waiver Interest

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2008-09/189 · issued 22 Sep 2008 · ~2 min read
Quick answerRBI allows banks to use floating provisions on advances to absorb interest/charges they must bear under the Agricultural Debt Waiver and Relief Scheme, 2008, without prior approval for this specific purpose.

What changed

Previously, floating provisions could only be used with RBI's prior approval. This circular permits banks to discretionarily utilise floating provisions held for advances to cover interest/charges they are required to bear under the Agricultural Debt Waiver and Debt Relief Scheme, 2008, such as unapplied interest, penal interest, and legal charges.

What it means for you

Banks can now absorb the cost of waived interest and charges under the scheme without seeking RBI's nod each time, easing their immediate provisioning burden. However, floating provisions cannot be used for any other provisioning needs without RBI approval, maintaining discipline. This is a one-time relief tied to the extraordinary circumstances of the scheme.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

All Scheduled Commercial Banks (including Local Area Banks), Banks implementing the Agricultural Debt Waiver and Debt Relief Scheme, 2008

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Can we use floating provisions for other provisioning needs under this circular?

No. The circular explicitly states that floating provisions should not be utilised for meeting any other provisioning requirements without RBI's prior approval, as was the case earlier.

What specific charges can be covered using floating provisions?

The circular allows coverage of interest in excess of principal, unapplied interest, penal interest, legal charges, inspection charges, and miscellaneous charges that banks are required to bear under the scheme.

Is prior RBI approval needed to use floating provisions for this purpose?

No. Banks can use their discretion to utilise floating provisions for these scheme-related interest/charges without seeking prior RBI approval.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #2100: DBOD.No.BP.BC.48/21.04.048/2008-09 — "Prudential Norms on Utilisation of Floating Provisions - Agricultural Debt Waiver and Debt Relief Scheme, 2008" dated Se”
📜 Read the original circular — full text as issued by RBI
RBI/2008-09/189 DBOD.No.BP.BC. 48 /21.04.048/2008-09 September 22, 2008 The Chairman / CMD / MD / CEO All Scheduled Commercial Banks (including Local Area Banks) (Excluding RRBs) Dear Sir Prudential Norms on utilisation of Floating Provisions - Agricultural Debt Waiver and Debt Relief Scheme, 2008 Please refer to paragraph 5.6 of the  Master Circular DBOD.No.BP.BC. 20/21.04.048/2008-09 dated July 1, 2008 , on prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances, which stipulates the norms governing the utilisation of Floating Provisions by the banks. 2. In terms of paragraph 2 (ix) (a) of the  Annex to circular RPCD.No.PLFS.BC.73 /05.04.02/2007-08 dated May 30, 2008 , on Agricultural Debt Waiver and Debt Relief Scheme, 2008, lending institutions shall neither claim from the Central Government, nor recover from the farmer, interest in excess of the principal amount, unapplied interest, penal interest, legal charges, inspection charges and miscellaneous charges, etc. All such interest / charges will be borne by the lending institutions. 3. In view of the extraordinary circumstances in which the banks are required to bear the interest/ charges mentioned at paragraph 2 above, it has been decided to allow the banks to utilise, at their discretion, the Floating Provisions held for 'advances' portfolio, only to the extent of meeting the interest /charges referred to in paragraph 2 above. The Floating Provisions should not, however, be utilised for meeting any other provisioning requirements without RBI's prior approval, as hitherto. Yours faithfully (P. Vijaya Bhaskar) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/189 · issued 22 Sep 2008. The plain-English explanation above is BankPulse’s own independent summary.
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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4489&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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