Financial Daily from THE HINDU group of publications
Thursday, Mar 28, 2002
Financial Daily from THE HINDU group of publications Thursday, Mar 28, 2002 |
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Money & Banking
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Non-Performing Assets Agri-Biz & Commodities - Farm credit New RBI norms for settling farmers' loans Our Bureau
MUMBAI, March 27 RBI has formulated new guidelines for a special one-time settlement (OTS) for small and marginal farmers on loans up to Rs 50,000. The OTS is in line with the Finance Minister's recent Budget speech announcing the introduction of the scheme. The guidelines will be operative up to December 31. The RBI guidelines cover all loan accounts with an outstanding balance of up to Rs 50,000 to small and marginal farmers, which have become NPAs as on March 31, 1998. The central bank, however, has specified that the settlement would cover only the principal amount, which has become outstanding as on March 31, 1998 and any interest which is included in the outstanding amount as on that date or accrued on the balance outstanding after March 31, 1998 will be waived. The scheme is expected to cover suit-filed and decreed debts but will not cover cases of frauds, malfeasance and wilful debts. The amount of settlement should be paid in one lump sum and in "deserving cases'', the RBI has said that banks may consider recovering the settlement amount in instalments with down payment of at least 25 per cent to be received the time of settlement. The balance amount should be recovered within one year from the date of settlement. The board of directors of banks have been told to frame the policies on compromise settlement of NPAs covered under the guidelines. Banks are also to devise their own accounting procedure for treatment of the outstanding amount subject to the OTS. The RBI has also told banks to review the progress and details of settlement made and the compromise settlement should be made at monthly intervals.
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