Relief for farmers on debt row
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Rushing to the rescue of debt-ridden farmers throughout the country, the UPA government on Friday announced an urgent package of debt relief and enhanced bank credit without waiting for the budget on July 8. The package includes a one-time settlement of loans of all small andmarginal farmers in default. This will involve a waiver in major part, if not total write-off. They will also be made eligible for fresh bank credits. The Reserve Bank of India (RBI) which controls commercial banks and Nabard, which is the nodal agency for cooperative and regional rural banks (RRBs), will relax the prudential norms for this. In addition, commercial banks, cooperatives and RRBs will take over loans given by moneylenders in some parts of the country (read Andhra Pradesh) where farmers face acute distress. Banks have been permitted to provide these farmers relief from indebtedness against “appropriate collateral or group security”. All classes of farmers in calamity-hit districts will be given debt relief by loan restructuring. Interest outstandings up to March 31, 2004, will be clubbed with the principal and the whole amount will be repayable over seven years, including the first two years of moratorium. The current rate of interest of 8.5% will be charged on these loans, taken at 12%or more. All farmers everywhere, who are in arrears and thus not eligible for fresh credit, will be provided debt rescheduling. Each commercial bank will have its own schemefor rescheduling while cooperatives and RRBs will be governed by Nabard guidelines for this purpose. |