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Friday, Aug 09, 2002

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Norms to reschedule crop loans to drought-hit soon

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THE Union Agriculture Minister, Mr Ajit Singh, has said that the Reserve Bank of India (RBI) would soon issue guidelines to banks for rescheduling their crop loans to farmers in drought-affected areas.

Addressing a meeting of State Co-operative Ministers on `Reforms in co-operative sector' here on Thursday, the Minister said that commercial banks would be instructed to convert the principal and interest amount on short-term loans due this year into term loans of 2-3 years.

The banks could also defer recovery of the converted loans.

Further, the National Bank of Agriculture and Rural Development (NABARD) has advised State co-operative banks and regional rural banks to provide additional and enhanced loans to farmers to offset the impact of expenditure losses incurred by farmers due to monsoon failure and also towards purchase of fodder and installation of tube/bore wells and deepening of wells.

Besides, the General Insurance Corporation (GIC) has been asked to grant a 15-day extension for acceptance of insurance proposals from non-loanee farmers, who had been forced to go in for late sowing on account of delayed rains.

This would enable them to avail crop insurance benefits, Mr Singh said, adding that the current drought was much more widespread and worse than the last one of 1987.

Rs 8,000 cr package

The Minister also announced an Rs 8,000-crore financial package for restructuring the country's co-operative credit structure. Mr Singh said that State co-operative banks would be allowed to float 10-year bonds in the market, with the Centre and State Governments paying 10 per cent interest on these on a 60:40 ratio, which will then be utilised for cleansing the balance sheets of the banks.

Mr Singh, however, clarified that the floating of bonds by the SCBs would be conditional upon the State Government concerned undertaking necessary reforms in the co-operative sector.

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