Agricultural Debt Waiver and Debt Relief Scheme, 2008 – Prudential Norms on Income Recognition, Asset Classification, Provisioning and Capital Adequacy
In view of the recent drought in some States and the severe floods in some other parts of the country, the Government of India, as announced in the Union Budget 2010-11, has now decided to extend the last date of payment of 75% of overdue portion by the ‘other farmer’ under Debt Relief Scheme (under ADWDR) for another six months beyond December 31, 2009, i.e up to June 30, 2010. The eligible “other farmers” may be allowed to repay this amount in one or more instalments up to June 30, 2010.
Accordingly, Where the farmers covered under the Debt Relief Scheme have given the undertaking, agreeing to pay their share under the OTS, their relevant accounts may be treated by banks as "standard" / "performing" provided :
(a) adequate provision is made by the banks for the loss in present value (PV) terms for all the receivables due from the borrowers. (For computing the amount of loss in PV terms under the Scheme, the balance amount receivable from the farmers may be assumed to be due on June 30, 2010. The cash flows should be discounted to the present value at the interest rate at which the loan was granted including the element of interest subsidy, if any, available from the Government.)
(b) such farmers pay their share of the settlement latest by the revised last date, i.e. June 30, 2010.
In case, however, the payments are delayed by the farmers beyond June 30, 2010, the outstanding amount in the relevant accounts of such farmers shall be treated as NPA.
Click here for the text of the notification DBOD.No.BP.BC. 82 /21.04.048/2009-10
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