The Finance Minister, in his Budget Speech for 2008-2009, announced a Debt Waiver and Debt Relief Scheme for farmers.

Scope

The Scheme covers the direct agricultural loans extended to ‘Marginal and Small farmers’ and ‘Other farmers’ by Scheduled Commercial Banks, Regional Rural Banks, Cooperative Credit Institutions (including Urban Cooperative Banks) and Local Area Banks

Eligible amount

The amount eligible for debt waiver or debt relief, as the case may be (hereinafter referred to as the ‘eligible amount’), shall comprise of:

a) in the case of a short-term production loan, the amount of such loan (together with applicable interest):

• disbursed up to March 31, 2007 and overdue as on December 31, 2007 and remaining unpaid until February 29, 2008;
• restructured and rescheduled by banks in 2004 and in 2006 through the special packages announced by the Central Government, whether overdue or not; and
• restructured and rescheduled in the normal course up to March 31, 2007, as per applicable RBI guidelines on account of natural calamities, whether overdue or not.

b) In the case of an investment loan, the installments of such loan that are over due (together with applicable interest on such installments) if the loan was

• disbursed up to March 31, 2007 and overdue as on December 31, 2007 and remaining unpaid until February 29, 2008;
• restructured and rescheduled by banks in 2004 and in 2006 through the special packages announced by the Central Government; and
• restructured and rescheduled in the normal course up to March 31, 2007 as per applicable RBI guidelines on account of natural calamities

c) Explanation: In the case of an investment loan disbursed up to March 31, 2007 and classified as non-performing asset or suit filed account, only the installments that were overdue as on December 31, 2007 shall be the eligible amount.

The following loans shall not be included in the eligible amount:

• advances against pledge or hypothecation of agricultural produce other than standing crop; and
• agricultural finance to corporates, partnership firms, societies other than cooperative credit institutions and any similar institution
• Nothing contained in this Scheme shall apply to any loan disbursed by a lending institution prior to March 31, 1997

Debt Waiver & Debt Relief

Debt Waiver

• In the case of a small or marginal farmer, the entire ‘eligible amount’ shall be waived.

Debt Relief

• In the case of ‘other farmers’, there will be a one-time settlement (OTS) Scheme under which the farmer will be given a rebate of 25 per cent of the ‘eligible amount’ subject to the condition that the farmer pays the balance of 75 per cent of the ‘eligible amount’.
• Provided that in the case of revenue districts listed in Annex-I (enclosed in ADWDRS, 2008 Scheme Guidelines),‘other farmers’ will be given OTS rebate of 25 per cent of the ‘eligible amount’ or Rs.20,000, whichever is higher, subject to the condition that the farmer pays the balance of the ‘eligible amount’

Implementation

• Reserve Bank of India shall be the nodal agency for the implementation of the Scheme in respect of scheduled commercial banks, urban cooperative banks and local area banks.
• NABARD shall be the nodal agency in respect of regional rural banks and cooperative credit institutions.

The Debt Waiver portion of the Scheme was closed on 30 June 2008.

The Debt Relief portion of the Scheme was closed on 30 June 2010.

Link for download: AGRICULTURAL DEBT WAIVER AND DEBT RELIEF SCHEME, 2008 - Guidelines