Rs 1700 cr interest relief to farmers approved

Greater Kashmir

New Delhi, Mar 31: The Union Cabinet has approved a proposal for release of Rs.1700 crore to provide interest relief of two percentage points in the interest rate on principal amount up to Rs.1 lakh each on crop loans availed by the farmers for Kharif and Rabi 2005-06, a PIB handout said.
Following up on the Budget announcement which envisages grant of interest relief of two percentage points in the interest rate on the principal amount up to Rs. 1 lakh each on crop loans availed by the farmers for Kharif and Rabi 2005-06, RBI has issued a circular dated March 9, 2006 to the Commercial Banks Similarly, NABARD has also issued a circular to Cooperative Banks and Regional Rural Banks (RRBs). The amount of the relief is required to be credited to the borrower’s account before March 31, 2006. The relevant portion of this circular regarding the interest relief is as follows :
“It has been decided that banks may first credit the proposed relief to the farmer’s account before March 31, 2006 and thereafter seek reimbursement.
Banks may work out the interest relief on the following basis: All crop loans for Kharif & Rabi disbursed to farmers during the financial year 2005-06 will be eligible for interest relief of two percentage points. However, where each crop loan exceeds Rs. 1 lakh, the interest relief will be applicable on the principal amount up to Rs. 1 lakh only.
Interest relief may be calculated at two percentage points, on the amount of the crop loan disbursed from the date of disbursement/drawal up to the date of payment or upto the date beyond which the outstanding loan becomes overdue i.e. March 31, 2006 for Kharif and June 30, 2006 for Rabi respectively, which ever is earlier”.
The borrowers who have availed crop loans upto Rs. 1 lakh each for Kharif and Rabi 2005-06 will receive immediate benefit.