DBOD.No. BP.BC.120/21.04.048/98
December
29, 1998
Paush 1920 (Saka)
All Commercial Banks
Dear Sirs,
PRUDENTIAL NORMS ON INCOME
RECOGNITION, ASSET CLASSIFICATION AND PROVISIONING- AGRICULTURAL LOANS AFFECTEDBY
NATURAL CALAMITIES
In terms of the instructions
issued by RPCD (c.f. Circular RPCD. No. PLFS.BC.128/05.04.02/97-98 dated July
21, 1998), where natural calamities impair the repaying capacity of
agricultural borrowers, banks have been permitted to decide on their own as a
relief measure, (a) conversion of the short-term production loan into a term
loan or re-schedulement of the repayment period and (b) the sanctioning of
fresh short-term loan, subject to the various guidelines indicated in para
2(v) of the above mentioned circular dated June 20, 1998. We advise that in
such cases of conversion or re-schedulement, the term loan as well as fresh
short-term loan may be treasted as current dues and need not be classified as
NPA. The asset classification of these loans would thereafter be governed by
the revised terms and conditions ans would be treated as NPA if interest
and/or instalment of principal remains unpaid, after it has become past due,
for two harvest seasons but for a period not excedding two half years as
indicated in our Circular DBOD.No.BP.BC.17/21.04.048-98 dated March 4, 1998.
Please acknowledge receipt.
Yours faithfully,
(C.R. Muralidharan)
General Mangar