Banks across the country have agreed to give borrowers of agricultural loans in Kerala, one year of moratorium period, due to the harsh drought witnessed by the state. Plus, they have also decided to temporarily call off the recovery process of farm loans, a decision which was taken at meeting organized by the state government.
Some of the agri-loans will also be rescheduled to medium term or long term time periods. The moratorium will be applicable on outstanding balances of farm loans as per books on December 31, 2012, on the same date when Kerala was officially declared a drought hit state.
However, these conditions will not apply on defaulted agricultural loans or farm loans against which recovery process had already begun.
Reportedly, co-operative banks in the state have already executed these decisions. At a meeting of State-Level Bankers' Committee (SLBC) held recently, banks also agreed not to impose penal interest on the rescheduled advances.