RBI/2004/270
UBD.BPD.PCB.
Cir. 53 /13.05.00/2003-04 June 30, 2004 All
Primary (Urban) Co-operative Banks Dear Sir, Annual
Policy Statement for the year 2004-05 : Prudential Norms for Agricultural Advances As
per para 2.1.1(iv) of the Master Circular dated December 26, 2004 relating to
income recognition, asset classification and provisioning, all direct agricultural
advances as listed in the Annexure I to the circular would become NPA, when interest
and / or instalment of principal remains unpaid after it has become due for two
harvest seasons, not exceeding two half years. 2. In
this connection, we invite your attention to paragraph No.84
of the annual policy Statement for the year 2004-05 dated May 18, 2004 (copy of
the paragraph enclosed for ready reference). As mentioned therein, in the case
of long duration crops, the current prescription of 'not exceeding two half-years'
is inadequate. In order to align the repayment dates with harvesting of crops,
it has been decided that with effect from September 30, 2004 the following revised
norms will be applicable to all direct agricultural advances as listed in the
Annexure : - A loan granted for short duration
crops will be treated as NPA, if the instalment of principal or interest thereon
remains overdue for two crop seasons.
- A loan
granted for long duration crops will be treated as NPA, if the instalment of principal
or interest thereon remains overdue for one crop season.
3.
For the purpose of these guidelines, 'long duration' crops would be crops with
crop season longer than one year and crops, which are not 'long duration' crops
would be treated as 'short duration' crops. 4. The crop
season for each crop, which means the period up to harvesting of the crops raised,
would be as determined by the State Level Bankers' Committee in each State. 5.
Depending upon the duration of crops raised by an agriculturist, the above NPA
norms would also be made applicable to agricultural term loans availed of by him.
In respect of agricultural loans, other than those specified in the Annexure and
term loans given to non-agriculturists, identification of NPAs would be done on
the same basis as non-agricultural advances which, at present, is the 90 days
delinquency norm. We, however, advise that the relaxation granted to small loans
(including gold loans) up to 1 lakh would remain unchanged and that such loans
would continue to be governed by 180 days impairment norms. 6.
Banks are urged to ensure that while granting loans and advances, realistic repayment
schedules may be fixed on the basis of cash flows / fluidity with the borrowers.
This would go a long way to facilitate prompt repayment by the borrowers and thus
improve the record of recovery in agricultural advances. 7.
In case banks require any clarifications on the above guidelines, they may approach
the Chief General Manager-in-Charge, Rural Planning & Credit Department at
the following address : Reserve
Bank of India,
Central Office, 13th floor,
Shahid Bhagat Singh
Road,
P. B. No 1004, Mumbai – 400 001
Fax Nos. : 22658276/ 22621011/ 22658273
Yours
faithfully, (N.S.Vishwanathan) Chief
General Manager Encls : 3 sheets
Extract
of Annual Policy Statement for the year 2004-05
" NPA Norms for Agricultural Finance 84.
As per the extant norms, advances granted for agricultural purposes
are treated as NPA where interest and/or instalment of principal remain unpaid
after it has become due for two harvest seasons but for a period not exceeding
two half years. However, in the case of longer duration crops, the current prescription
of not exceeding two half years is inadequate. In order to align the repayment
dates with harvesting of crops, it is proposed that: - A
loan granted for short duration crops will be treated as an NPA if the instalment
of the principal or interest thereon remains unpaid for two crop seasons beyond
the due date.
- A loan granted for long
duration crops will be treated as an NPA if the instalment of the principal or
interest thereon remains unpaid for one crop season beyond the due date.
- All the above prescriptions of crop loans would also be
applicable, mutatis mutandis, to agricultural term loans. "
Relevant
extract of the list of direct agricultural advances from the Master Circular on
lending to priority sector – RPCD. PLAN. BC. 42A/
04.09.01/ 2001-02 dated 11 November, 2002. 1.1 Direct Finance to
Farmers for Agricultural Purposes 1.1.1 Short-term
loans for raising crops i.e. for crop loans. In addition, advances upto Rs.5 lakh
to farmers against pledge/ hypothecation of agricultural produce (including warehouse
receipts) for a period not exceeding 12 months, where the farmers were given crop
loans for raising the produce, provided the borrowers draw credit from one bank. 1.1.2
Medium and long-term loans (Provided directly to farmers for financing
production and development needs). (i) Purchase of agricultural implements
and machinery (a)
Purchase of agricultural implements - Iron ploughs, harrows, hose, land-levellers,
bundformers, hand tools, sprayers, dusters, hay-press, sugarcane crushers, thresher
machines, etc. (b) Purchase of farm
machinery - Tractors, trailers, power tillers, tractor accessories viz., disc
ploughs, etc. (c) Purchase of trucks, mini-trucks,
jeeps, pick-up vans, bullock carts and other transport equipment, etc. to assist
the transport of agricultural inputs and farm products. (d)
Transport of agricultural inputs and farm products. (e)
Purchase of plough animals.
(ii)
Development of irrigation potential through – (a)
Construction of shallow and deep tube wells, tanks, higher etc., and purchase
of drilling units. (b) Constructing, deepening
clearing of surface wells, boring of wells, electrification of wells, purchase
of oil engines and installation of electric motor and pumps. (c)
Purchase and installation of turbine pumps, construction of field channels (open
as well as underground), etc. (d) Construction
of lift irrigation project. (e) Installation
of sprinkler irrigation system. (f) Purchase
of generator sets for energisation of pumpsets used for agricultural purposes.
(iii)
Reclamation and Land Development Schemes Bunding of
farm lands, levelling of land, terracing, conversion of dry paddy lands into wet
irrigable paddy lands, wasteland development, development of farm drainage, reclamation
of soil lands and prevention of salinisation, reclamation of ravine lands, purchase
of bulldozers, etc. (iv) Construction of farm buildings and structures,
etc. Bullock sheds, implement sheds, tractor and truck sheds, farm stores,
etc. (v) Construction and running of storage facilities Construction
and running of warehouses, godowns, silos and loans granted to farmer for establishing
cold storages used for storing own produce. (vi) Production and processing
of hybrid seeds for crops. (vii) Payment of irrigation charges, etc. Charges
for hired water from wells and tube wells, canal water charges, maintenance and
upkeep of oil engines and electric motors, payment of labour charges, electricity
charges, marketing charges, service charges to Customs Service Units, payment
of development cess, etc. (viii) Other types of
direct finance to farmers (a) Short-term loans To
traditional/non-traditional plantations and horticulture. (b) Medium
and long term loans 1. Development loans to all plantations, horticulture,
forestry and wasteland.
2. Financing of small and marginal farmers for purchase
of land for agricultural purposes.
|