Conversion of Loans

Medium Term credit limits for conversion of outstanding short term loans advanced for financing SAO are sanctioned by the NABARD to the State Co-operative Bank on behalf of DCC Bank u/s 22 of NABARD Act 1981 against Government guarantees, to provide relief to farmers whose crops were damaged due to natural calamities by way of conversion of Short term agricultural loan into medium term loan and replacement/reschedulement. The rate of interest will be the same as applicable to ST agricultural loans that are being converted.

Important Features of the Policy

a)A consolidated limit will be sanctioned to the State Co-operative Bank in respect of eligible DCC Banks by NABARD.

b)The eligibility norms as stipulated for sanction of ST (SAO) limit for the relevant year will also be applicable for sanction of MT (Conversion)/rephasement/reschedulement.

c)The refinance assistance from NABARD and State Government will be 60% & 15% of ground level conversion and State Co-operative Banks & DCC Banks will share balance 25% in a mutually agreed proportion.

d)Annewari assessment has been streamlined on the basis of the various recommendation of the working group (appointed by the Government of India, Ministry of Agriculture) on scientific method of assessing crop yield in the event of natural calamities for conversion of short-term production loans into MT & LT loans.

e)In the event of natural calamity, the State Government would declare Annewari based on scientific assessment of crop yields in the affected year through a prescribed number of crop cuttings experiments.

f)As per RBI letter RPCD.PLFS.BC No.42/05.02.2002/05-06, dated 01.05.2005, the following procedure may be followed as an alternative to the present system of Annewari declaration.

The District Collector, on occurrence of natural calamity such as drought, flood etc., may ask the LEAD BANK OFFICER, to convene a meeting of the DCC and submit a report to the DCC on the extent of crop loss in the area affected by the natural calamity. If the DCC is satisfied that there has been extensive crop loss on account of the natural calamity, the relief including conversion/restructuring facilities of agricultural loans as per the standing guidelines may be extended to the farmers affected by the natural calamity without declaring Annewari.