Under the debt relief scheme, called One Time Settlement (OTS), farmers were given debt relief to the extent of 25 per cent of their loans, if they pay 75 per cent of their debt to the banking sector. The scheme is for loans that were overdue on December 31, 2007 and remained unpaid until February 29, 2008.
Now the Government has allowed banks to receive even less than 75 per cent of these loans from farmers, provided they do not seek the Government help in this regard, the Reserve Banks said in a notification here.
The Government of India has advised that the banks/ lending institutions are allowed to receive even less than 75 per cent of the eligible amount under OTS provided the banks/ lending institutions bear the difference themselves and do not claim the same either from the Government or from the farmer, the central bank said.
The Government will pay only 25 per cent of the actual eligible amount under debt relief, the Reserve Bank said.
The Government also made some more changes in the original OTS scheme. RBI-DEBT2LST Earlier, the farmers were asked to pay the sum in three instalments. The deadline of first instalment was extended from September 30, 2008 to March 31, 2009. However, the deadlines of the remaining two instalments were kept unchanged at March 31, 2009 and June 30, 2009.
Now the Government said that farmers would be eligible for OTS even if they pay their entire 75 per cent due in one instalment, provided the money is paid by June 30 this year.
To this effect, the Government asked banks not to charge any interest on due amount till June 30, the RBI said.
OTS is expected to benefit about one crore farmers. The scheme was part of the debt waiver and debt relief scheme announced by former Finance Minister P Chidambaram in the budget for 2008-09.