RBI/2004-05/37 RPCD.CO.RF.BC.No.3/07.37.02/2003-04
July 12, 2004
All State Co-operative Banks and Central Co-operative Banks
Dear Sir,
Prudential Norms on Income Recognition Asset Classification
and Provisioning - Agricultural advances
Please refer to our circular RPCD.CO.RF.BC.No.70/07.37.02/2001-02
dated March 27, 2002 on the above subject.
As per the extant norms, advances granted for
direct agricultural purposes are treated as NPA, where interest and/or instalment
of principal remain unpaid after they become due for two harvest seasons not
exceeding two half years. However, in the case of longer duration crops, the
current prescription of not exceeding two half years is inadequate. In order
to align the repayment dates with harvesting of crops, banks are advised that
with effect from September 30, 2004 the following revised norms will be applicable:
- A loan granted for short duration crops will be treated
as NPA if the instalment of the principal or interest thereon remains unpaid
for two crop seasons beyond the due date.
- A loan granted for long duration crops will be treated
as NPA, if the instalment of principal or interest thereon remains unpaid
for one crop season beyond the due date.
2. For the purpose of these guidelines, "long
duration" crops would be crops with crop season longer than one
year, and crops which are not "long duration" crops, would be
treated as "short duration" crops.
3. The crop season for each crop, which means
the period up to harvesting of the crops raised, would be as determined by the
State Level Bankers’ Committee in each State.
4. Depending upon the duration of crops raised
by an agriculturist, the above NPA norms would also be made applicable to agricultural
term loans availed of by him as indicated in the Annex. In
respect of agricultural loans, other than those specified in the Annex and term
loans given to non-agriculturists, identification of NPAs would be done on the
same basis as non-agricultural advances which, at present, is 180 days delinquency
norm and which would be reduced to 90 days delinquency norm by the year ending
March 31, 2006, as advised in our circular RPCD.No.RF.BC. 39/07.37.02/2002-03
dated December 30, 2002.
5. Banks are advised to ensure that while granting
loans and advances, realistic repayment schedules may be fixed on the basis
of cash flows/ fluidity with the borrowers and thus improve the record of recovery
in agricultural advances.
6. All other instructions in our circular RPCD.
BC. No. 155 /07.37.02/95-96 dated June 22, 1996 as amended from time to time
remain unchanged.
7. The contents of this circular may be placed
before the Board of Directors of your bank.
8. Please acknowledge receipt to our concerned
regional office.
Yours faithfully,
(C.S.Murthy)
Chief General Manager In-Charge
Encl: As above
Annex
Relevant extract of the list of direct agricultural
advances from the Master Circular on lending to priority
sector –
RPCD. PLAN. BC. 42A/ 04.09.01/ 2001-02 dated
11 November, 2002.
1.1 Direct Finance to Farmers for Agricultural Purposes
1.1.1 Short-term loans for raising crops i.e.
for crop loans. In addition, advances upto Rs.5 lakh to farmers against pledge/
hypothecation of agricultural produce (including warehouse receipts) for a period
not exceeding 12 months, where the farmers were given crop loans for raising
the produce, provided the borrowers draw credit from one bank.
1.1.2 Medium and long-term loans (Provided directly to farmers
for financing production and development needs).
(i) Purchase of agricultural implements and machinery
(a) Purchase of agricultural implements
- Iron ploughs harrows, hose, land-levellers, bundformers, hand tools,
sprayers, dusters, hay-press, sugarcane crushers, thresher machines, etc.
(b) Purchase of farm machinery - Tractors, trailers,
power tillers, tractor accessories viz., disc ploughs, etc. (c) Purchase of trucks, mini-trucks, jeeps, pick-up vans, bullock
carts and other transport equipment, etc. to assist the transport of agricultural
inputs and farm products. (d) Transport of agricultural inputs and farm products. (e) Purchase of plough animals.
(ii) Development of irrigation potential through –
(a) Construction of shallow and deep tube
wells, tanks, higher etc., and purchase of drilling units.
(b) Constructing, deepening clearing of surface
wells, boring of wells, electrification of wells, purchase of oil engines and
installation of electric motor and pumps. (c) Purchase and installation of turbine pumps, construction
of field channels (open as well as underground), etc. (d) Construction of lift irrigation project. (e) Installation of sprinkler irrigation system.
(f) Purchase of generator sets for energisation
of pumpsets used for agricultural purposes.
(iii) Reclamation and Land Development Schemes
Bunding of farm lands, levelling of land, terracing,
conversion of dry paddy lands into wet irrigable paddy lands, wasteland development,
development of farm drainage, reclamation of soil lands and prevention of salinisation,
reclamation of ravine lands, purchase of bulldozers, etc.
(iv) Construction of farm buildings and structures, etc.
Bullock sheds, implement sheds, tractor and truck sheds, farm
stores, etc.
(v) Construction and running of storage facilities
Construction and running of warehouses, godowns, silos and loans
granted to farmer for establishing cold storages used for storing own produce.
(vi) Production and processing of hybrid seeds for crops.
(vii) Payment of irrigation charges, etc.
Charges for hired water from wells and tube
wells, canal water charges, maintenance and upkeep of oil engines and electric
motors, payment of labour charges, electricity charges, marketing charges, service
charges to Customs Service Units, payment of development cess, etc.
(viii) Other types of direct finance to farmers
(a) Short-term loans
To traditional/non-traditional plantations
and horticulture.
(b) Medium and long term loans
1. Development loans to all plantations,
horticulture, forestry and wasteland.
2. Financing of small and marginal farmers
for purchase of land for agricultural purposes.
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