Banks, states asked to help farmers in distress: Sinha

25/04/2015

New Delhi: The state-level bankers' committee and states have been asked to take immediate steps to mitigate the hardship of farmers following destruction of their crops by unseasonal rains and hailstorms, the government said on Friday.
Minister of State for Finance Jayant Sinha said in a written reply in the Lok Sabha that the Reserve Bank has also issued necessary guidelines to banks to provide relief to the crisis-ridden farmers.
"In view of the recent unseasonal rains and hailstorms in several parts of the country, Government has issued advisory to all State Level Bankers' Committees (SLBCs) to take immediate steps to mitigate the hardship of farmers in accordance with the guidelines/instructions issued by RBI/GoI," he said.
The Home Minister, Sinha said, "has advised the state governments...To take utmost care and ensure that all individual beneficiary oriented assistance is necessary/ mandatorily disbursed through the bank account of the beneficiary".
Besides, he said, the central bank "has issued necessary guidelines for relief measures to be taken by banks for the benefit of farmers in areas affected by natural calamities, which inter alia, include conversion and restructuring of agricultural loans in such areas".
Unseasonal rains and hailstorms during February-March damaged crops over 93.81 lakh hectares in several states including Gujarat, Punjab, Bihar and Uttar Pradesh.
Several political parties are demanding loan waiver to help farmers.
Sinha said the 2 percent interest subvention scheme will be available to farmers reeling under the impact of natural calamity in the first year on restructured loans. They will, however, be required to pay the normal rate of interest from the second year onwards.
Sinha said that in the event of natural calamity, NABARD also extends refinance facility to cooperative and regional rural banks to provide relief to farmers whose crops had been damaged.
"Generally, conversion is allowed for a period of 5 years for small and marginal farmers and three years for other farmers," he said, adding that the conversion of loan depends on intensity of calamity and extent of crop loss.
NABARD had provided Rs 6,000 crore each in 2913-14 and 2014-15 to cooperative and regional rural banks towards the interest subvention scheme.
In a separate answer, Sinha said the government has simplified the Kisan Credit Card scheme and converted the KCCs into ATM enabled debit cards eliminating the need for disbursement of funds through camps or involvement of middleman.
"The KCC scheme in its present form is simplified taking care of various requirements of farmers and has built-in provision of cost escalation...In event of natural calamities, the short term crop loans as well as agricultural term loans may be rescheduled/restructured, with provision of moratorium," he said.
Sinha added however that in view of various provisions like built-in cost escalation provisions, the government was not considering any proposal to increase credit limit, validity period or loan repayment period of KCC.

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