Cabinet approves guidelines for farm loan waiver scheme

New Delhi, May 23 (UNI) The Cabinet today approved the guidelines for implementation of the Rs 66,000 crore farm loan waiver/relief scheme, directing the banks to release the list of beneficiaries by the end of next month which would make the farmers eligible for fresh credit.

Finance Minister P Chidambaram told reporters that the estimate of the scheme had gone up by 10 per cent since the February 29 Budget which had put the figure at Rs 60,000. About 3.69 crore small and marginal farmers and six million other farmers would be benefitted by the scheme.

The scheme would cover direct agricultural loans extended to marginal and small farmers and ''other farmers'' by Scheduled Commercial Banks, Regional Rural Banks, Cooperative Credit Institutions, including Urban Cooperative Banks and Local Area Banks.

Under the guidelines, marginal farmers means a farmer cultivating (as owner or tenant or share cropper) agricultural land up to one hectare (2.5 acres). Small farmers means a farmer cultivating agricultural land of more than one hectare and up to two hectares.

Other farmer means a farmer cultivating agricultural land of more than two hectares.

In the case of a small or marginal farmer, the entire eligible amount shall be waived. In the case of other farmers, there will be a one-time settlement (OTS) scheme under which the farmer will be given a rebate of 25 per cent of the eligible amount subject to the condition that the farmer pays the balance of 75 per cent of the eligible amount.

The amount eligible for debt waiver or debt relief shall comprise of: (a) In the case of a short-term production loan, the amount of such loan (together with applicable interest) -- disbursed upto March 31, 2007 and overdue as on December 31, 2007 and remaining unpaid until February 29, 2008; -- restructured and rescheduled by banks in 2004 and in 2006 through the special packages announced by the Central Government, whether overdue or not; and -- restructured and rescheduled in the normal course up to March 31, 2007 as per applicable RBI guidelines on account of natural calamities, whether overdue or not.

In the case of an investment loan, the instalments of such loan that are overdue (together with applicable interest on such instalments) if the loan was: -- disbursed upto March 31, 2007 and overdue as on December 31, 2007 and remaining unpaid until February 29, 2008; -- restructured and rescheduled by banks in 2004 and in 2006 through the special packages announced by the Centre, whether overdue or not; and -- restructured and rescheduled in the normal course upto March 31, 2007 as per applicable RBI guidelines on account of natural calamities.

Loans that would not be included in the eligible amount are advances against pledge or hypothecation of agricultural produce other than standing crop and agricultural finance to corporate, partnership firms, societies other than cooperative credit institutions and any similar institution.

Nothing contained in the scheme would apply to any loan disbursed by a lending institution prior to March 31, 1997.

The lending institutions shall not charge any interest on the eligible amount for any period after February 29, 2008. However, in the case of an other farmer who defaults in paying his shares of the eligible amount on or before June 30, 2009 and becomes ineligible for OTS relief, the bank may charge interest for the period after June 30, 2009.

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