However, the amount outstanding in the accounts covered by the debt relief scheme shall be treated as a claim on the borrowers and risk weighted as per the extant norms. This treatment would apply under the Basel I as well as Basel II Frameworks.
The balance in this account may be treated by the banks as a performing asset, provided adequate provision is made for the loss in present value (PV) terms, computed under the assumption that such payments would be received from the Centre in the following installments: a)32% of the total amount due by September 30, 2008, b)19% by July 31, 2009, c)39% by July 2010, and d)the remaining 10% by July 2011. However, the provision required under the current norms for standard assets need not be provided for in respect of the balance in this account.
In case the claim of a farmer is specifically rejected at any stage, the asset classification of the account should be determined with reference to the original date of NPA (as if the account had not been treated as performing in the interregnum based on the transfer of the loan balance to the aforesaid account) and suitable provision should be made. The provision made on PV basis may also be reckoned against the NPA-provisions required, consequent upon the account being treated as NPA due to the rejection of the claim.