December 27, 2005
The Chairman/ Managing Director
All Scheduled Commercial Banks
(Including RRBs & LABs)
One-Time Settlement Scheme for Small Borrowal Accounts and Eligibility for Fresh Loans
In order to offer small borrowers an opportunity
to settle their NPA accounts with banks and become eligible for fresh finance,
all scheduled commercial banks (including Regional Rural Banks and Local Area
Banks) are advised to provide a simplified mechanism for one-time settlement
of loans where the principal amount is equal to or less than Rs.25000/- and
which have become doubtful and loss assets as on September 30, 2005.
2. In case of loans granted under government-sponsored
schemes, banks may frame separate guidelines following a state-specific approach
to be evolved by the SLBC.
3. The mechanism will not, however, cover cases
of fraud and malfeasance.
4. The borrowers whose accounts are settled
under this mechanism will be fully eligible for fresh loans.
5. Banks may devise an appropriate scheme/s
and initiate measures to implement the same.
6. Please acknowledge receipt.
Chief General Manager