Flood-hit farmers, SMEs get banks' relief package

The banks in Maharashtra have finalised a relief package for those affected by floods in the state. It includes rescheduling the loans and sanction of additional loans as an immediate assistance.

Interestingly, the relief package has included business units for the first time. It includes small businesses, traders, transport operators or certain categories of self-employed persons in areas notified as flood affected by government of Maharashtra.

The package was finalised in a recent meeting of the state level bankers' committee chaired by Bank of Maharashtra Chairman M D Mallya.

State Commissioner for Agriculture Krishna Lavekar, as well as senior functionaries from the Reserve bank and National Bank for Agriculture and Rural Development (Nabard) were present at the meeting.

"The package, based largely on the existing guidelines of the Reserve Bank, would involve rescheduling of the existing term loans for a period of up to ten years, depending upon the type of investment and economic life of the asset financed. It also includes conversion of short term loans to farmers or the balances of Kisaan Credit Cards into term loans repayable in five years for small and marginal farmers and three years for other farmers in normal circumstances," said sources.

Additionally, a consumption loan for sustenance till flow of income is resumed, ranging from Rs 5000 to Rs 10000 has also been provided in the package.

The package has, for the first time, covered affected small business units to offer them conversion of outstanding Working Capital limits into term loans repayable within seven years, including one year of repayment holiday. The units will also be eligible for fresh working capital loans limits.

The small scale industry and tiny units will be given conversion of short term loans and working capital limits with interest to term loans repayable within a period of maximum seven years as per repaying capacity and suitable moratorium be provided.

Also, depending upon the damage suffered and time needed for rehabilitation and restarting sales, term loan installments will be suitably rescheduled keeping in view the income generating capacity of the unit.

The package includes need-based term loans for repairs, renovation, purchase of machinery and working capital requirements, which will be provided as per RBI guidelines.

For the loans to self help groups and retail segment, lending and other norms will be relaxed at the discretion of the bank for self help groups affected by floods.

Similarly retail or consumer loans may be restructured in a manner suitable to the borrowers on case-to-case basis.