To provide relief to farmers availing short-term crop loans and those affected by natural calamities, the Reserve Bank of India said an interest subvention of 2 per cent per annum will be made available to banks for the first year on the restructured loan amount.

Such restructured loans will attract normal rate of interest from the second year onwards, the RBI said in its updated ‘Master Directions on Relief Measures by Banks in Areas affected by Natural Calamities’. While the rate of interest will be in accordance with the Master Directions on Interest Rate on Loans and Advances, the RBI said within the area of their discretion, banks shall take a sympathetic view of the difficulties of the borrowers, and extend a concessional treatment to calamity-affected people.

In respect of default in current dues, no penal interest will be charged. Banks will also suitably defer the compounding of interest charges.

Banks will not levy penal interest and consider waiving penal interest, if any, already charged in regard to the loans converted/rescheduled. Depending on the nature and severity of the natural calamity, the State Level Bankers’ Committee (SLBC)/ District Credit Committee (DCC) will take a view on the interest rate concession that could be extended to borrowers so that there is uniformity in approach among banks in providing relief.

The RBI said that under the Prime Minister’s Fasal Bima Yojana (PMFBY), all Seasonal Agricultural Operations (SAO) loans for notified crops in notified areas are to be compulsorily provided insurance cover for all stages of the crop cycle, including post-harvest risks in specified instances.

Farmers’ details are required to be entered by banks in the unified portal for crop insurance to facilitate assessment of coverage of crops insured, and premiums deducted, among others.

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