The Hindu Business Line : Non-farm co-op bank loan defaulters get interest relief

Chennai, July 8 The State Government has announced a special scheme providing for interest concessions for those who have defaulted on non-farm loans from cooperative banks.

Making a ‘suo motu’ statement in the Assembly, the Finance Minister, Mr K. Anbazhagan, said the concession was for loans on which the last due was to have been paid on March 31, 2007.

Under the scheme, the defaulters would have to pay a simple interest of 6 per cent from the date on which they availed themselves of the loan. Earlier, they would have paid a simple interest of 12 per cent. The banks will waive penal interest and other charges.

To benefit from this scheme, the borrowers will have to enter into an agreement with the cooperative banks before October 31, and repay the loan within three months of the agreement.

The first instalment of 25 per cent of dues will have to be paid immediately after the agreement and the balance in one to three instalments.

This concession follows an earlier scheme announced on December 27, 2006, when the prevailing rate of 18 per cent compound interest and 3 per cent penal interest was reduced to a simple interest of 12 per cent with effect from March 31, 2001. The penal interest was waived. This scheme was open up to June 30, 2009. Under this scheme, over Rs 509.99 crore of loans were recovered as of March 31, 2009. However, there was further outstanding amounting to Rs 709.51 crore.

The State Government will compensate the cooperative banks up to 4 per cent of the interest and the cooperative banks will have to foot the balance. The concessions under the latest scheme provide for a write-off of Rs 144.62 crore interest, Rs 101.98 crore penal interest and Rs 4.61 crore of other charges, taking the total write off to Rs 251.21 crore to benefit over 1.32 lakh borrowers.

More Stories on : Co-operatives | Policy | Non-Performing Assets | Tamil Nadu | Interest Rates

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Non-farm co-op bank loan defaulters get interest relief