What changed
The last date for 'other farmers' to pay 75% of the overdue amount under the Debt Relief Scheme is extended by six months to June 30, 2010. Banks may now accept less than 75% under OTS, provided they absorb the shortfall themselves. The government will only reimburse 25% of the actual eligible amount.
What it means for you
Banks must adjust their provisioning and asset classification for accounts where farmers have given undertakings to pay by June 30, 2010. If farmers fail to pay by the new deadline, accounts revert to NPA status from the original NPA date, requiring additional provisions. Banks also cannot claim interest from the government for the extension period.
What you must do
- Update internal systems to reflect the new June 30, 2010 deadline for 'other farmers' under the Debt Relief Scheme.
- Ensure accounts with farmer undertakings are classified as 'standard' only if adequate PV loss provisions are made and payment is received by June 30, 2010.
- If accepting less than 75% from farmers, absorb the difference and do not claim it from the government or farmer.
- Extend the grievance redressal deadline to July 31, 2010 for related complaints.
- Continue following the accounting treatment specified in the September 16, 2009 circular.
Who it affects
State Co-operative Banks (StCBs), District Central Co-operative Banks (DCCBs), Other lending institutions covered under ADWDRS 2008, Farmers classified as 'other farmers' under the scheme
What is the new deadline for 'other farmers' to pay their 75% share?
The deadline is extended to June 30, 2010, from the earlier December 31, 2009.
Can banks accept less than 75% from farmers under OTS?
Yes, but banks must bear the difference themselves and cannot claim it from the government or farmer.
What happens if a farmer fails to pay by June 30, 2010?
The account will be treated as NPA, with asset classification determined from the original NPA date, and additional provisions must be made.