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Our Bureau

Mumbai , June 24

IN order to align the repayment dates with harvesting of crops, the RBI has decided that with effect from September 30, 2004 the recently announced revised NPA recognition norms will be applicable to all direct agricultural advances.

As per the new norms as stated in the recent credit policy, loan granted for short duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for two crop seasons. A loan granted for long duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for one crop season, said a release from the central bank.

For the purpose of these guidelines, "long duration" crops would be those with crop season longer than one year and crops, which are not "long duration" crops, would be treated as "short duration" crops.

Banks are urged to ensure that while granting loans and advances, realistic repayment schedules may be fixed on the basis of cash flows/fluidity with the borrowers. This would go a long way to facilitate prompt repayment by the borrowers and thus improve the record of recovery in agricultural advances.

More Stories on : RBI & Other Central Banks | Farm credit | Non-Performing Assets

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