bank audit
This query is : Resolved
23 April 2011
when a agriculture loan becomes NPA?
25 April 2011
Hi Nitin
Please refer below.
Annual Policy Statement for the year 2004-05 – Prudential Norms for Agricultural Advances
In terms of paragraph No. 4.2.12 of the Master Circular DBOD.No.BP.BC.15/ 21.04.048/ 2002-03 dated August 22, 2003 relating to income recognition, asset classification and provisioning, all direct agricultural advances as listed in the Annexure II to the circular would become NPA, when interest and / or instalment of principal remains unpaid after it has become due for two harvest seasons, not exceeding two half years.
2. In this connection, please refer to paragraph No.84 of the annual policy Statement for the year 2004-05 enclosed with Governor's letter No.MPD.BC.249/07.01.279/2003-04 dated May 18, 2004 (copy of the paragraph enclosed). As mentioned therein, in the case of long duration crops, the current prescription of 'not exceeding two half-years' is inadequate. In order to align the repayment dates with harvesting of crops, it has been decided that with effect from September 30, 2004 the following revised norms will be applicable to all direct agricultural advances as listed in the Annex :
A loan granted for short duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for two crop seasons.
A loan granted for long duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for one crop season.
3. For the purpose of these guidelines, 'long duration' crops would be crops with crop season longer than one year and crops, which are not 'long duration' crops, would be treated as 'short duration' crops.
4. The crop season for each crop, which means the period up to harvesting of the crops raised, would be as determined by the State Level Bankers' Committee in each State.
5. Depending upon the duration of crops raised by an agriculturist, the above NPA norms would also be made applicable to agricultural term loans availed of by him. In respect of agricultural loans, other than those specified in the Annex and term loans given to non-agriculturists, identification of NPAs would be done on the same basis as non agricultural advances which, at present, is the 90 days delinquency norm.
6. Banks are urged to ensure that while granting loans and advances, realistic repayment schedules may be fixed on the basis of cash flows / fluidity with the borrowers. This would go a long way to facilitate prompt repayment by the borrowers and thus improve the record of recovery in agricultural advances.
7. In case, banks require any clarifications on the above guidelines, they may approach the Chief General Manager-in-Charge, Rural Planning & Credit Department at the following address :
Please refer below.
Annual Policy Statement for the year 2004-05 – Prudential Norms for Agricultural Advances
In terms of paragraph No. 4.2.12 of the Master Circular DBOD.No.BP.BC.15/ 21.04.048/ 2002-03 dated August 22, 2003 relating to income recognition, asset classification and provisioning, all direct agricultural advances as listed in the Annexure II to the circular would become NPA, when interest and / or instalment of principal remains unpaid after it has become due for two harvest seasons, not exceeding two half years.
2. In this connection, please refer to paragraph No.84 of the annual policy Statement for the year 2004-05 enclosed with Governor's letter No.MPD.BC.249/07.01.279/2003-04 dated May 18, 2004 (copy of the paragraph enclosed). As mentioned therein, in the case of long duration crops, the current prescription of 'not exceeding two half-years' is inadequate. In order to align the repayment dates with harvesting of crops, it has been decided that with effect from September 30, 2004 the following revised norms will be applicable to all direct agricultural advances as listed in the Annex :
A loan granted for short duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for two crop seasons.
A loan granted for long duration crops will be treated as NPA, if the instalment of principal or interest thereon remains overdue for one crop season.
3. For the purpose of these guidelines, 'long duration' crops would be crops with crop season longer than one year and crops, which are not 'long duration' crops, would be treated as 'short duration' crops.
4. The crop season for each crop, which means the period up to harvesting of the crops raised, would be as determined by the State Level Bankers' Committee in each State.
5. Depending upon the duration of crops raised by an agriculturist, the above NPA norms would also be made applicable to agricultural term loans availed of by him. In respect of agricultural loans, other than those specified in the Annex and term loans given to non-agriculturists, identification of NPAs would be done on the same basis as non agricultural advances which, at present, is the 90 days delinquency norm.
6. Banks are urged to ensure that while granting loans and advances, realistic repayment schedules may be fixed on the basis of cash flows / fluidity with the borrowers. This would go a long way to facilitate prompt repayment by the borrowers and thus improve the record of recovery in agricultural advances.
7. In case, banks require any clarifications on the above guidelines, they may approach the Chief General Manager-in-Charge, Rural Planning & Credit Department at the following address :
25 April 2011
whether there is any provision of zero balance in every year in case of ugc agriculture loan
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