What changed
The Government extended the repayment deadline for 'other farmers' under the Debt Relief Scheme: they can now pay their 75% share as a single instalment by June 30, 2009 and still qualify for 25% relief. Banks are permitted to accept less than 75% under one-time settlement, provided they absorb the difference and do not claim it from the government or farmer.
What it means for you
Co-operative banks can now offer more flexible repayment options to 'other farmers' under the 2008 debt waiver scheme, potentially improving recovery rates. However, if banks accept less than 75% under OTS, they must bear the loss themselves, impacting their provisioning and profitability. No interest accrues on the eligible amount until the new deadline.
What you must do
- Update internal systems to accept single instalment of 75% from 'other farmers' by June 30, 2009 for 25% govt relief.
- Ensure no interest is charged on eligible amount till June 30, 2009.
- If offering OTS for less than 75%, book the shortfall as bank's own expense and do not claim from government or farmer.
- Communicate revised terms to all branches and eligible farmers promptly.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (DCCBs), 'Other farmers' under the Agricultural Debt Waiver and Debt Relief Scheme, 2008
Can 'other farmers' still get 25% relief if they pay 75% after March 31, 2009?
Yes, the government extended the deadline to June 30, 2009 for a single lump sum payment of 75% to qualify for 25% relief.
What if a farmer pays less than 75% under OTS?
Banks may accept less, but must bear the difference themselves; the government will only pay 25% of the actual eligible amount.