What changed
RBI announced a temporary liquidity support of Rs.25,000 crore to scheduled banks and NABARD for financing agricultural operations. The support is linked to the quantum of debt waived under the Agricultural Debt Waiver and Debt Relief Scheme, 2008. It is provided at 9% per annum under specific sections of the RBI Act, 1934, and must be repaid within three weeks, by November 3, 2008.
What it means for you
This measure ensures banks have immediate funds to continue agricultural lending despite the debt waiver program. Co-operative banks and RRBs get Rs.17,500 crore, while commercial banks get Rs.7,500 crore, easing liquidity pressure. Banks must act quickly to access this short-term facility before the November 3 deadline.
What you must do
- Assess your bank's outstanding agricultural advances and debt waiver amounts under the 2008 scheme to determine eligibility.
- For scheduled commercial banks and UCBs, approach the Regional Director, Deposit Accounts Department, RBI, Mumbai to avail the support.
- Non-scheduled UCBs may route requests through respective State Cooperative banks; RRBs and co-operatives through NABARD.
- Ensure repayment of the liquidity support within three weeks but not later than November 3, 2008, as per the timeline.
Who it affects
All scheduled commercial banks, Scheduled urban co-operative banks (UCBs), Non-scheduled UCBs, Regional Rural Banks (RRBs), Co-operative banks, NABARD
What is the interest rate for this liquidity support?
The liquidity support is provided at 9% per annum.
How is the support amount determined for each bank?
The limits are related to the quantum of debt waived by banks under the Agricultural Debt Waiver and Debt Relief Scheme, 2008.
What is the repayment deadline for this facility?
The support must be repaid within three weeks from the date of the circular, but not later than November 3, 2008.