Bangiya Bank yet to get loan relief circular

On the advent of the proposed loan waiver scheme, the regional rural banks are confused on whether to continue on the circulars of the Reserve Bank of India on the poultry exposure after the flu out break.

Regional rural banks like Bangiya Grameen Vikash Bank (BGVB) had started parallel relief programme with the outbreak of bird flu.

Prior to the budget there was no confusion as directives from the regulator were at par with the ongoing programme of the West Bengal based regional rural bank.

But post budget the scenario has changed as the poultry exposure was under the agriculture and allied activities thereby under the debt waiver scheme.

BGVB was confused on actual waiver details and whether to continue with the current circulars or wait for the government guidelines.

When contacted, Ambarisha Nanda, chairman of BGVB, said the RBI circular could be merged with the ongoing flu relief programmes of the bank.

However he also said that every thing regarding the process of implementation would be clear once the bank received the circular on the farm loan waiver scheme.

"We are awaiting guidelines from the government as the exposure to the poultry units falls under the loans to agricultural and allied activities and hence this should come under the waiver scheme. So the correct implementation is possible only after the clear direction from th regulator," Nanda said.

The final decision regarding this would be taken only after the board meeting which is scheduled in two days time, Nanda said.

Currently the bank had exposure of Rs 450 crore in the agriculture and the allied activities of which poultry exposure was around Rs 10 crore. Keeping in view the loss of income that has occurred due to culling of birds as well as steep fall in the demand for poultry products and their prices, RBI has issued certain directives on February 17, 2008, to all scheduled commercial banks under which all unpaid loans would be converted into term loans.

The regulator has directed the regional rural banks to complete the rescheduling process by the end of April 2008 and the borrowers would be eligible for fresh loans as par the needs.

According to the circular all the principal and interest due on the working capital loans as also interest and installments and interest on term loans which have fallen due for payment on the account of the flu till December 31, 2007, and remaining unpaid may be converted into term loans.

Moreover the converted loans could be recovered in installments based on the projected future inflows over a period up to three years with an initial moratorium of up to one year.

Similarly rescheduling of the existing term loans would also be allowed, again with a moratorium period up to one year depending upon the cash flow generating capacity of the unit. All the rescheduling should be completed by 30 April, 2008 and of would be treated as current dues, RBI circular said.

The above relief measures might be extended to all accounts of the poultry industry which were classified as the standard accounts as on December 31, 2007.