Banks to draw up schemes for distressed farmers
By Mumbai: | 21 Jun 2004
Mumbai: The Indian Banks' Association yesterday met to draw up a scheme for distressed farmers. Talking to news persons, a bank official participating in the meeting said, "IBA met today to work out the details of a scheme whereby banks can offer fresh loans to defaulters who have come up for settlement. Banks typically shy away from farmers if they have defaulted once even if the situation that led to the default was not within his control."
Another issue was that of systemic rigidity. If the farmer defaults for more than three times (i.e. typically over three years) the Reserve Bank of India stipulates that he becomes ineligible for further loan sanctions. The new scheme envisages that he be given more chances say up to six to seven times provided he is not a wilful defaulter, he said.
The scheme worked will be presented to the management committee of the Indian Banks' Association (IBA) and if approved will be sent to the Finance Ministry and the RBI. With the regulators' nod in place, banks will be able to implement the same.
The chairman of IBA and the chairperson of NABARD are likely to meet the finance minister to discuss a rural finance package, which may find a mention in the upcoming budget.
