What changed
The previous limit of Rs 50,000 for waiving margin and security on agricultural loans has been increased to Rs 1,00,000. This modification applies to all scheduled commercial banks, including RRBs and local area banks, with immediate effect.
What it means for you
Banks can now extend agricultural loans up to Rs 1,00,000 without insisting on margin or collateral, reducing paperwork and faster credit delivery to small and marginal farmers. This eases compliance for lenders and improves access to formal credit for the agriculture sector.
What you must do
- Update internal lending policies and loan sanctioning guidelines to reflect the new Rs 1,00,000 waiver limit.
- Communicate the change to all controlling offices and branches with immediate implementation instructions.
- Ensure adequate publicity of the revised limit through bank notices, website updates, and farmer outreach programs.
- Monitor compliance to ensure no margin/security is demanded for agricultural loans up to Rs 1,00,000.
Who it affects
All Scheduled Commercial Banks (including RRBs), Local Area Banks, Agricultural loan borrowers (especially small and marginal farmers), Bank branch managers and credit officers
Does this circular apply to all types of agricultural loans?
Yes, the waiver applies to all agricultural loans as defined in the original circular of May 18, 2004, subject to the new limit of Rs 1,00,000.
Are there any other conditions that remain unchanged?
Yes, all other conditions from the earlier circular (RPCD.Plan. BC. No. 87/04.09.01/2003-04) remain in force. Only the margin/security waiver limit has been revised.
When must banks implement this change?
The circular is effective immediately from June 18, 2010. Banks are required to instruct their branches and give adequate publicity without delay.