Business Daily from THE HINDU group of publications
Friday, Aug 29, 2008
ePaper | Mobile/PDA Version | Audio
Business Daily from THE HINDU group of publications Friday, Aug 29, 2008 ePaper | Mobile/PDA Version | Audio |
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Money & Banking
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Farm credit Agri-Biz & Commodities - New Products & Services Year-long crop loan access to farmers Our Bureau Mumbai, Aug. 28 The Reserve Bank India has introduced a new loan scheme for farmers which ensures access to credit throughout the year. Under the scheme, a farmer can get 80 per cent of the loan amount as short term production loan and the balance 20 per cent as an overdraft facility. The farmer can repay 20 per cent of the loan as and when he has the funds. He can also get another loan to the extent of 20 per cent. In a notice issued on Thursday, the RBI has asked banks to introduce the product in rain-fed areas, on a pilot basis, as per the recommendations of the Radhakrishna Expert Group. “Liquidity constraints of farmers in rain-fed areas should be mitigated through a cyclical credit system of treating crop loan as a weather cycle- long intervention rather than an annual feature,” the RBI said. As per RBI guidelines, a bank can give 80 per cent of the crop loan as a fixed component, which may be released through a short term production loan in conformity with the present norms. The remaining 20 per cent, representing the ‘core component’ (expenses for land preparation, pre-sowing operations etc. besides self labour/ consumption), may be sanctioned as a ‘clean credit limit’ to ensure year round liquidity. Asset classification norms as applicable to non-agricultural cash credit/overdraft accounts would apply to this clean credit limit, RBI said. More Stories on : Farm credit | New Products & Services | RBI & Other Central Banks
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