The Hindu : Revised farm credit norms for drought-hit States

Online edition of India's National Newspaper
Friday, Aug 09, 2002

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Revised farm credit norms for drought-hit States

By Gargi Parsai

New Delhi Aug. 8. The Centre today announced measures for revising the credit and insurance norms to mitigate the plight of farmers in the drought-affected States.

Stating that the current drought was worse than the one experienced in 1987, the Minister for Agriculture, Ajit Singh, today said that if it did not rain in the next eight to 10 days the farmers might suffer losses during the next rabi season as well.

Except for Assam and some other States, the current drought had affected the entire country. And contrary to reports that 12 States had been hit by the drought, there were districts which were completely dry even in States such as Bihar and West Bengal, which were reeling under floods.

Addressing a Conference of State Cooperative Ministers on Reforms in the Cooperative Sector, he said statistics did not give the real picture. NABARD had issued instructions to the State Cooperative Banks and Regional Rural Banks to provide additional crop loan at enhanced scales of finance to offset the loss on expenditure already incurred and to enable the farmers to go for fresh sowing operations. It had asked the banks to grant loans for the purchase of fodder, deepening of the wells and installation of tube and borewells. NABARD would provide its share of 60 per cent towards Agricultural Credit Stabilisation Fund of the State Cooperative Banks and also consider providing five per cent of State Governments' share.

With regard to investment credit, Mr. Singh said postponement of loan instalment of borrowers from Agricultural Rural Development Banks would be considered. The General Insurance Corporation had been instructed to extend by 15 days the date for acceptance of insurance proposals from non-loanee farmers who had gone for late sowing due to delayed rainfall.

The RBI was also being asked to instruct banks on the lines of 1998 for (a) conversion of principal and interest of short-term loan due in the year of the calamity into term loan for three to five years, which should also be recoverable in instalments of three years or more (b) deferment of recovery of converted loans (c) provision of fresh loans (d) not charging penal interest on loans up to Rs. 25,000 and (e) not compounding interest on dues rescheduled.

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