RBI/2007-2008/331
UBD.PCB.Cir.No.
43/13.05.000/07-08
May 23, 2008
The Chief Executive
Officers
of All Primary(Urban) Co-operative Banks
Dear Sir/Madam,
Union
Budget – 2008-09 – Agricultural Debt Waiver and Debt Relief Scheme, 2008 -UCBs
As
you are aware, the Hon’ble Finance Minister, in his Budget Speech (paragraph 73)
for 2008-09 has announced a debt waiver and debt relief Scheme for farmers, for
implementation by all scheduled commercial banks, RRBs and co-operative credit
institutions.
2. The detailed Scheme notified by the Government
of India along with necessary explanations is enclosed. The urban co-operative
banks may take necessary action towards implementation of the Scheme at the earliest.
The implementation of the Debt Waiver and Debt Relief Scheme should be completed
by June 30, 2008.
3. Further communication in respect
of this Scheme would follow.
Yours faithfully,
(Uma
Shankar)
Chief General Manager
AGRICULTURAL
DEBT WAIVER AND DEBT RELIEF SCHEME, 2008
1.
Introduction
1.1. The Finance Minister, in his Budget
Speech for 2008-2009, announced a Debt Waiver and Debt Relief Scheme for farmers.
1.2.
Guidelines for implementation of the Scheme are given below.
2.
Scope
2.1 The Scheme will cover direct agricultural
loans extended to ‘marginal and small farmers’ and ‘other farmers’ by Scheduled
Commercial Banks, Regional Rural Banks, Cooperative Credit Institutions (including
Urban Cooperative Banks) and Local Area Banks (hereinafter referred to compendiously
as "lending institutions") as indicated in the Guidelines.
2.2
The Scheme shall come into force with immediate effect.
3.
Definitions
3.1. ‘Direct Agricultural Loans’
means Short Term Production Loans and Investment Loans provided directly to farmers
for agricultural purposes. This would also include such loans provided directly
to groups of individual farmers (for example Self Help Groups and Joint Liability
Groups), provided banks maintain disaggregated data of the loan extended to each
farmer belonging to that group.
3.2. ‘Short Term Production
Loan’ means a loan given in connection with the raising of crops which is
to be repaid within 18 months. It will include working capital loan, not exceeding
Rs. 1 lakh, for traditional and non-traditional plantations and horticulture.
3.3.
‘Investment Loan’ means
(a) investment credit
for direct agricultural activities extended for meeting outlays relating to the
replacement and maintenance of wasting assets and for capital investment designed
to increase the output from the land, e.g. deepening of wells, sinking of new
wells, installation of pump sets, purchase of tractor / pair of bullocks, land
development and term loan for traditional and non-traditional plantations and
horticulture; and
(b) investment credit for allied activities
extended for acquiring assets in respect of activities allied to agriculture e.g.
dairy, poultry farming, goatery, sheep rearing, piggery, fisheries, bee-keeping,
green houses and biogas.
3.4. ‘Cooperative Credit Institution’
means a cooperative society that
i) provides short-term
crop loans to farmers and is eligible for interest subvention from the Central
Government; or
ii) carries on banking activities regulated or supervised by
RBI or NABARD; or
iii) is part of the Short-Term Cooperative Credit Structure
or Long-Term Cooperative Credit Structure in a State or Union Territory.
3.5.
‘Marginal Farmer’ means a farmer cultivating (as owner or tenant or share
cropper) agricultural land up to 1 hectare (2.5 acres).
3.6.
‘Small Farmer’ means a farmer cultivating (as owner or tenant or share
cropper) agricultural land of more than 1 hectare and up to 2 hectares (5 acres).
3.7. ‘Other Farmer’ means a farmer cultivating (as
owner or tenant or share cropper) agricultural land of more than 2 hectares (more
than 5 acres).
Explanation:
1. The
classification of eligible farmers as per the above landholding criteria under
the Scheme would be based on the total extent of land owned by the farmer either
singly or as joint holder (in the case of an owner-farmer) or the total extent
of land cultivated by the farmer (as tenant or share cropper), at the time of
sanction of the loan, irrespective of any subsequent changes in ownership or possession.
2. In the case of borrowing by more than one farmer
by pooling their landholdings, the size of the largest landholding in the pool
shall be the basis for the purpose of classification of all farmers in that pool
as ‘marginal farmer’ or ‘small farmer’ or ‘other farmer’.
3.
In the case of a farmer who has obtained investment credit for allied activities
where the principal loan amount does not exceed Rs.50,000, he would be classified
as "small and marginal farmer" and, where the principal amount exceeds
Rs.50,000, he would be classified as ‘other farmer’, irrespective in both cases
of the size of the land holding, if any.
4. Direct agricultural
loan taken under a Kisan Credit Card would also be covered under this Scheme subject
to these Guidelines.
5. A short-term production loan
and an investment loan taken by a farmer shall be counted as two distinct loans
and the Scheme will apply to the two loans separately. Likewise, in the case of
a farmer who has taken two investment loans for two separate purposes, the two
loans shall be counted as two distinct loans and the Scheme will apply to the
two loans separately.
4. Eligible amount
4.1
The amount eligible for debt waiver or debt relief, as the case may be (hereinafter
referred to as the ‘eligible amount’), shall comprise of:
(a) in
the case of a short-term production loan, the amount of such loan (together with
applicable interest):
(i) disbursed up to March 31, 2007
and overdue as on December 31, 2007 and remaining unpaid until February 29, 2008;
(ii) restructured
and rescheduled by banks in 2004 and in 2006 through the special packages announced
by the Central Government, whether overdue or not; and
(iii) restructured
and rescheduled in the normal course up to March 31, 2007 as per applicable RBI
guidelines on account of natural calamities, whether overdue or not.
(b) in
the case of an investment loan, the installments of such loan that are over due
(together with applicable interest on such installments) if the loan was:
(i) disbursed
up to March 31, 2007 and overdue as on December 31, 2007 and remaining unpaid
until February 29, 2008;
(ii) restructured and rescheduled by banks in 2004
and in 2006 through the special packages announced by the Central Government;
and
(iii) restructured and rescheduled in the normal course up to March
31, 2007 as per applicable RBI guidelines on account of natural calamities.
Explanation:
In the case of an investment loan disbursed up to March 31, 2007 and classified
as non-performing asset or suit filed account, only the installments that were
overdue as on December 31, 2007 shall be the eligible amount.
4.2.
The following loans shall not be included in the eligible amount:
(a) advances
against pledge or hypothecation of agricultural produce other than standing crop;
and
(b) agricultural finance to corporates, partnership firms, societies
other than cooperative credit institutions (referred to in para 3.4), and any
similar institution.
4.3 Nothing contained in this Scheme
shall apply to any loan disbursed by a lending institution prior to March 31,
1997.
5. Debt Waiver
5.1.
In the case of a small or marginal farmer, the entire ‘eligible amount’ shall
be waived.
6. Debt Relief
6.1.
In the case of ‘other farmers’, there will be a one time settlement (OTS) Scheme
under which the farmer will be given a rebate of 25 per cent of the ‘eligible
amount’ subject to the condition that the farmer pays the balance of 75 per cent
of the ‘eligible amount’;
Provided that in the case
of revenue districts listed in Annex-I, ‘other farmers’ will be given OTS
rebate of 25 per cent of the ‘eligible amount’ or Rs.20,000, whichever is higher,
subject to the condition that the farmer pays the balance of the ‘eligible amount’.
7.
Implementation
7.1. Every branch of a scheduled commercial
bank, regional rural bank, cooperative credit institution, urban cooperative bank
and local area bank covered under this Scheme shall prepare two lists, one consisting
of ‘small and marginal farmers’ who are eligible for debt waiver and the second
consisting of ‘other farmers’ who are eligible for debt relief under this Scheme.
The lists shall include particulars of the landholding, the eligible amount and
the amount of debt waiver or debt relief proposed to be granted in each case.
The lists shall be displayed on the notice board of the branch of the bank/society
on or before June 30, 2008.
7.2. A farmer classified as
‘small farmer’ or ‘marginal farmer’ will be eligible for fresh agricultural loans
upon the eligible amount being waived.
7.3. A farmer classified
as ‘other farmer’ eligible for OTS relief shall give an undertaking agreeing to
pay his share (that is eligible amount minus the amount of OTS relief) in not
more than three instalments and the first two instalments shall be for an amount
not less than one-third of his share. The last dates of payment in the case of
three instalments will be September 30, 2008; March 31, 2009 and June 30, 2009.
7.4. The undertaking shall be in such form as may be prescribed
by RBI/NABARD.
7.5. The amount of OTS relief (i.e. the
Central Government’s share) will be credited to the account of the ‘other farmer’
upon the farmer paying his share in full.
7.6. In the case
of a short-term production loan, the ‘other farmer’ will be eligible for fresh
short-term production loan upon paying one-third of his share.
7.7.
In the case of an investment loan (for direct agricultural activities or allied
activities), the ‘other farmer’ will be eligible for fresh investment loan upon
paying his share in full.
7.8. Reserve Bank of India shall
be the nodal agency for the implementation of the Scheme in respect of scheduled
commercial banks, urban cooperative banks and local area banks. NABARD shall be
the nodal agency in respect of regional rural banks and cooperative credit institutions.
8. Interest and other charges
8.1.
The lending institutions shall not charge any interest on the ‘eligible amount’
for any period after February 29, 2008. However, in the case of an ‘other farmer’
who defaults in paying his share of the eligible amount on or before June 30,
2009 and becomes ineligible for OTS relief, the bank may charge interest for the
period after June 30, 2009.
8.2. Instalments of investment
credit which fall overdue after 31.12.2007 shall be recovered by the lending institutions
along with the applicable interest. Lending institutions may, however, in appropriate
cases, reschedule these instalments in accordance with the normal policy of the
lending institution concerned.
8.3. Notwithstanding anything
contained in this Scheme, the amount of interest that a lending institution may
claim as reimbursement from the Central Government under this Scheme shall not,
in any case, exceed the principal amount of the loan.
8.4.
Ministry of Finance will issue supplemental instructions to the lending institutions
in respect of all incidental and ancillary matters including instructions on interest
and other charges that shall not be claimed by the lending institutions from the
farmer or the Central Government.
9. Certificate of debt
waiver or debt relief
9.1. In the case of small and
marginal farmers, upon waiver of the eligible amount, the lending institution
shall issue a certificate to the effect that the loan has been waived and specifically
mention the eligible amount that has been waived.
9.2.
In the case of ‘other farmers’, upon granting OTS relief, the lending institution
shall issue a certificate to the effect that the loan account has been settled
to the satisfaction of the lending institution and specifically mention the eligible
amount, the amount paid by the farmer as his share and the amount of OTS relief.
9.3.
The certificate shall be in such form as may be prescribed by RBI/NABARD and upon
issuing the certificate the lending institution shall take an acknowledgement
from the farmer.
10. Obligations of the lending
institutions
10.1 Every lending institution shall be
responsible for the correctness and integrity of the lists of farmers eligible
under this Scheme and the particulars of the debt waiver or debt relief in respect
of each farmer. Every document maintained, every list prepared and every certificate
issued by a lending institution for the purposes of this Scheme shall bear the
signature and designation of an authorised officer of the lending institution.
10.2
Every lending institution shall appoint one or more Grievance Redressal Officers
for each State (having regard to the number of branches in that State). The name
and address of the Grievance Redressal Officer concerned shall be displayed in
each branch of the lending institution. The Grievance Redressal Officer shall
have the authority to receive representations from aggrieved farmers and pass
appropriate orders thereon. The order of the Grievance Redressal Officer shall
be final.
10.3 Any farmer who is aggrieved on the ground
that his name has not been included in either of the two lists referred to in
paragraph 7.1 or on the ground that his name has been included in the wrong list
or on the ground that the relief granted to him has been calculated wrongly, may
make a representation through the branch from which he received the loan or directly
to the Grievance Redressal Officer of the lending institution concerned and every
such representation shall be disposed of within 30 days of receipt thereof.
11.
Audit
The books of account of every lending
institution that has granted debt waiver or debt relief under this Scheme (including
the books of accounts maintained at the branches) shall be subject to an audit
in accordance with the procedure that may be prescribed by RBI/NABARD. The audit
may be conducted by concurrent auditors, statutory auditors or special auditors
as may be directed by RBI/NABARD. The Central Government, if it is satisfied that
it is necessary to do so, may direct a special audit in the case of any lending
institution or one or more branches of such lending institution.
12.
Publicity
12.1. A copy of this Scheme in English and
in the official language or languages of the State/Union Territory shall be displayed
in each branch of every lending institution covered under this Scheme.
12.2.
A copy of this Scheme will be available on the websites of the Ministry of Finance,
Department of Financial Services; RBI; and NABARD.
13.
Interpretation and power to remove difficulties
13.1.
If any doubt arises on the interpretation of any paragraph of this Scheme or any
instructions issued thereunder, the Central Government shall resolve the doubt
and the decision of the Central Government shall be final.
13.2.
If any difficulty arises in giving effect to the provisions of the Scheme or any
instructions issued thereunder, the Central Government may by order do anything
which appears to it to be necessary or expedient for the purposes of removing
the difficulty.
14. Monitoring
There
shall be constituted a National Level Monitoring Committee consisting of
(i) Secretary,
Department of Financial Services, Ministry of Finance – Chairperson
(ii) Secretary,
Department of Agriculture and Cooperation, Ministry of Agriculture
(iii) Deputy
Governor, Reserve Bank of India;
(iv) Chairman, NABARD;
(v) Chairman
and Managing Director of two public sector banks;
(vi) Chairman of two Regional
Rural Banks; and
Managing Director of two State Level Cooperative
Banks to monitor the implementation of the Scheme.
(Annex
1 (to the Guidelines)
Revenue
Districts covering DPAP, DDP areas and PM’s Special Relief Package Districts