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The Reserve Bank of India (RBI) told banks on Wednesday to adjust insurance proceeds in restructured accounts for loanee farmers during natural calamities.
A National Crop Insurance Programme (NCIP) has been implemented from 2013. Loanee farmers are compulsorily covered under the NCIP component scheme as notified by state governments. RBI, in ‘Guidelines for relief measures by banks in areas affected by natural calamities’, said while restructuring of loans in such areas, the lenders should also take into account the proceeds, if any, receivable from the insurance company.
RBI noted there are no uniform procedures for declaration of a natural calamity and issue of declarations/certificates. It said the common thread to extend relief measures is that the crop loss assessed should be 50 per cent or more.
The regulator said one should distinguish between a drought, generally a slowly evolving calamity and which could aggravate or reverse, depending on rainfall, and other calamities of a sudden nature.
For the latter, RBI said the loss should be assessed through crop cut experiments clearly indicating the loss in the particular area had been 50 per cent or more, to trigger rescheduling of loans.
