Farmers can use old Rs 500 notes for buying seeds, borrowers get 60-day loan breather

On Monday the familiar queues were back outside banks, and ATMs ran out of cash across the country. Easing norms for cash-strapped farmers, the Finance Ministry on Monday permitted them to use old Rs 500 notes for purchasing seeds from any state or central government outlets and agri universities.

Farmers can purchase seeds from the centres, units or outlets belonging to the central or state governments, public sector undertakings, national or state seeds corporations, central or state agricultural universities and the Indian Council of Agricultural Research (ICAR), on production of proof of identity, the finance ministry said in a statement. The government is committed to ensure that farmers are suitably facilitated during the Rabi season, it said.

This is in addition to the decision taken earlier for making cash available with the farmers by permitting them to draw up to Rs 25,000 per week from their KYC compliant accounts subject to the normal loan limits and conditions apart from the other facilities announced last week.

Besides, the government has also extended the deadline for payment of crop insurance premium by 15 days and permitted APMC-registered traders to withdraw up to Rs 50,000 per week.

In another move, in view cash crunch being faced by borrowers, the RBI on Monday provided additional 60 days for repayment of housing, car, farm and other loans worth up to Rs 1 crore.

This is applicable to loans payable between November 1 and December 31, the RBI said in a notification.

“... it has been decided to provide an additional 60 days beyond what is applicable for the concerned regulated entity for recognition of a loan account as substandard,” it said. The above relaxation is available to entities running working capital accounts with any bank with the sanctioned limit of Rs 1 crore or less.

Term loans, whether business or personal, secured or otherwise, the original sanctioned amount of Rs 1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI) would also get benefit of this relaxation. This will also include housing loans and agriculture loans, it said.

The apex bank further said that all regulated financial institutions should note that this is a short-term deferment of classification as substandard due to delay in payment of dues arising during the period specified above and does not result in restructuring of the loans.