Sa-Dhan Newsletter Volume 4 Issue 2
Community Based Organisations
4.
Floor limit:-Instructions to be reiterated to ensure that
A reference is invited to our circular RPCD.PLFS.BC.NO./
farmers with small credit requirements also gain access
99/ 05.05.09/ 99-2000 dated June 6, 2000. Banks are
to credit through KCC
again advised that in order to facilitate wider coverage
under the Scheme, Kisan Credit Cards should be issued
for limits even below Rs.5000/-.
5.
Drawal of cash at branches other then the issuing branch:-
Vide para. 9(i) of the Model Scheme enclosed to our
Banks to provide facilities for withdrawal at more than
circular RPCD.PLFS.BC.NO./20 /05.05.09/ 98-99 dated
one branch, preferably all branches of the bank concerned
August 5, 1998 banks have been advised that ''banks
in the district.IBA may be requested to analyse/examine
may, at their discretion permit operations through other
the question of service charges, especially in the case of
designated branches, taking into account the convenience
small farmers and make suitable recommendations.
of the clientele". As for levying of service charges banks
may be guided by the instructions contained in our
circular RPCD. Plan. BC/ 53 /04.09.01/ 2002-2003
dated December 20, 2002.
6.
Charges for issuing KCC:-(i) A fee not exceeding Rs.50
Charges for issuing KCCs should be commensurate
for issue of a KCC (laminated photo card) to be allowed
with the actual expenses and it should not be considered
at the discretion of banks.(ii) In the case of small loans
as a source of income. A fee charged, if any, for issue
of upto Rs.25,000, no charges other than interest and KCC
of a laminated photo card should not exceed Rs.50/-
issue charges (such as folio charge, processing fee,
.As for service charges, a reference is invited to our
appraisal fee, etc.) to be collected.(iii) Charges levied on
circular RPCD. Plan. BC/ 53 /04.09.01/ 2002-2003
accounts in default to continue at bank's discretion.
dated December 20, 2002. Accordingly, no service
charges or inspection charges should be levied by banks
on KCCs with limits upto Rs.25000/- (priority sector
loans upto Rs. 25000/-).
7.
Compounding of interest on agricultural loans:Existing
In this connection we invite a reference to paragraph
instructions that banks should not compound interest on
1.12 of our circular RPCD.NO.PS.BC.29/ PS.22-84
crop loans is to be reiterated with examples so as to clarify
dated March 16, 1984 read with RPCD.NO.PS.BC.12/
the issue.
C. 568A-84, RPCD.NO.BC. 21 /05.02.27/97-98,
RPCD.NO.PLFS.BC. 129/05.02.27/ 97-98 dated
September 15, 1984, August 28, 1997 and June 29,
1998 respectively, regarding compounding of interest
by commercial banks on agricultural advances and
reiterate that interest on current dues i.e. crop loans
and instalments not fallen due in respect of term loans
in respect of direct agricultural advances should not be
compounded.
8.
Fixation of shorter maturity periods and higher
In this connection we invite a reference to paragraph
instalmentsRBI and NABARD should reiterate earlier
1.8 of our circular RPCD.NO.PS.BC.29/ PS.22-84 dated
instructions on the need to fix the repayment periods and
March 16, 1984 read with RPCD.NO.BC. 21 /05.02.27/
instalments on the basis of the cash flows. The fixation
97-98 and RPCD. NO. PLFS. BC. 129 /05.02.27 / 97-
of shorter repayment periods may lead to loan defaults.
98 dated August 28, 1997 and June 29, 1998 respectively.
The suggested repayment periods for different investments,
We reiterate that for short term and term loans, the
as worked out in the model schemes may also be
repayment schedule should coincide with the time when
circulated among banks for their reference. Availing
the cultivator has sold his produce and is in funds. The
refinance from NABARD for term loans would address the
repayment of principal and payment of interest should
problems of the banks in meeting the asset-liability
be linked with fluidity of the borrower depending on
mismatch, if any, due to fixation of adequately long
the harvesting/ marketing of product.
repayment periods.
9.
Security normsBanks to ensure that the value of security
We invite a reference to item 10 of Annexure of circular
does not exceed 200% of the loan value. Banks to waive
RPCD.NO.PLFS. BC.123/ 05.05.16/ 97-98 dated
security requirements at their discretion for loans upto
20.05.1998 and reiterate that banks may use their
Rs.50,000 (RBI). State Governments (those which presently
discretion on matter relating to margin / security
do not offer such a waiver) to be requested to consider
requirements for agricultural loans above
waiver of stamp duty on mortgages against a loan value
Rs. 10,000/-
of Rs.1 lakh .
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