October 1, 2005
The Chairman/ Managing Director/Chief Executive Officer
(All scheduled commercial banks)
Dear Sir/Madam,
The Advisory Committee on Flow of Credit to Agriculture
and Related Activities from the Banking System
The Advisory Committee on Flow of Credit to
Agriculture and related activities from the Banking System (Vyas Committee)
in terms of paragraph 5.11 of the report had recommended as follows:
"To avoid delays, the Lead District Managers
of the lead bank should arrange to get from the district authorities timely
information on crop losses in the district caused by flood/drought, etc. On
the basis of such information, a Committee headed by the district manager of
the lead bank and comprising District Development Manager of NABARD, district
agriculture officer and managers of a few major banks operating in the district
as members, may consider crop losses due to weather aberrations in the district,
in consultation with agricultural scientists/local agricultural university and
take a decision on conversion / restructuring of agricultural loans. All banks
operating in the district should extend the facility of restructuring of loans
to eligible farmers on this basis once such a decision is made. It should be
promptly reported to the convenor of SLBC and may be recorded in the proceedings
of the immediately following meeting of the SLBC. Banks may authorise their
branches to take up conversion/rescheduling of loans based on the recommendations
of the above district level committee.’’
The issue relating to providing relief measures
by banks through rescheduling of loans
in the case of natural calamities, when there
is delay in declaration of Annewari by the State Government, has been referred
to in our guidelines and it has been mentioned therein that a certificate from
the District Collector can be accepted by the banks in such cases. Such certificates
were, however, not always forthcoming, as a result of which provision of relief
by banks got delayed.
As an alternative to the present system of Annewari,
it has, therefore, been decided that the task can be assigned to the District
Consultative Committee (DCC) which has representatives from banks as well as
the State Government and is headed by the District Collector. Our guidelines
on the subject envisage that the convenors of the District Consultative Committee/s
of the affected district/s should convene a meeting immediately after the occurrence
of natural calamities, to facilitate coordination and expeditious action by
the financing institutions. In the event of the calamity covering a larger part
of a State, the convenor of the State Level Bankers’ Committee will also convene
a meeting immediately, to evolve a coordinated programme of action for implementation
of the programme in collaboration with the State/ district authorities. Therefore,
the following procedure may be followed as an alternative to the present system
of Annewari declaration:
The District Collector, on occurrence of the
natural calamity such as drought, flood etc., may ask the Lead Bank Officer
to convene a meeting of the DCC, and submit a report to the DCC on the extent
of crop loss in the area affected by the natural calamity. If the DCC is satisfied
that there has been extensive crop loss on account of the natural calamity,
the relief including conversion/restructuring facilities of agricultural loans
as per the standing guidelines may be extended to the farmers affected by the
natural calamity ,without declaring Annewari.
2.Banks are requested to issue instructions
as above to their controlling offices and branches. The action taken may please
be communicated to us at the earliest.
3. Please acknowledge receipt.