Banks can give more comforts to farmers: RBI

MUMBAI: Public sector banks have been authorized to give more relief to farmers under the debt relief scheme, provided the lenders do not ask the government to bear the losses.

Under the debt relief scheme, called One Time Settlement (OTS), farmers were given debt relief to the extent of 25% of their loans, if they pay 75% 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% 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% 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% of the actual eligible amount under debt relief, the Reserve Bank said. The Government also made some more changes in the original OTS scheme.