Guidelines for relief measures to farmers affected by natural calamities - Conversion of ST (SAO) loans into Medium Term loans - Refinance Policy for the year 2022-23

Ref.No.NB.DoR(ST-Policy)/ 491 /A-10/2022-23

Circular No. 131 /DoR- 47 /2022

10 June 2022

Managing Director

All StCBs

Dear Sir

Guidelines for relief measures to farmers affected by natural calamities - Conversion of ST (SAO) loans into Medium Term loans - Refinance Policy for the year 2022-23

Please refer to our circular No. 130/DoR-44/2021 dated 16 June 2021 communicating the refinance policy for conversion of short-term agricultural loans into medium term loans and rephasement / reschedulement of existing MT (conversion) loans for the year F. Y. 2021-22. This line of credit which envisages providing relief to farmers, whose crops have been damaged, due to natural calamities has since been reviewed and it has been decided to continue broadly, with the same policy for the year 2022-23.

2. The eligibility of Cooperative Banks for sanction of credit limit, for conversion of ST (SAO) loans into medium term loans is linked to compliance with the CRAR norms. Refinance will be available to all licensed StCBs/ CCBs with CRAR conditions mentioned below:

a) Only such StCBs having CRAR of 9% and above, on behalf of DCCBs with CRAR of 9% and above (as on 03.2021),

b) In case of StCBs with CRAR more than 9%, but individual DCCBs with CRAR less than 9% as on 03.2021, no refinance will be available on behalf of such DCCBs.

3. The rate of interest on refinance on MT conversion / rephasement / reschedulement of loans for F. Y. 2022-23 will be 300 basis points below that charged by Banks to the ultimate beneficiaries subject to a minimum interest rate of 8.10% p.a. or as decided by NABARD from time to time. The rate of interest charged by the banks would be as per the RBI guidelines.

4. Other terms and conditions remain unchanged

5. The contents of this circular may be brought to the notice of Controlling Office of CCBs working under your jurisdiction.

6. Please acknowledge receipt of this circular to our Regional Office.

Yours faithfully

(V K Sinha)

Chief General Manager

Encl : As above

Annexure I

Guidelines on relief measures to farmers affected by natural calamities Conversion of ST (SAO) loans into medium term loans - Refinance Policy for F.Y. year 2022-23 for State Cooperative Banks

1. Consolidated limit will be sanctioned to StCB in respect of eligible CCBs.

2. Eligibility norms:

Eligibility norms as stipulated for sanction of Additional ST (SAO) limits for the year 2022-23 will be applicable for sanction of MT (conversion) which are as under:

2.1 Audit

Audit of StCB / DCCBs for the year 2020-21 should have been completed and the relative audit reports along with financial statements should have been received by the concerned Regional Office of NABARD. Further, the audit of State Cooperative Banks as on 31.03.2022 should be completed and the report submitted by 30.09.2022. Sanction and drawals on or after 01.10.2022 will be permitted only to such StCBs and against those DCCBs, which have completed the audit and submitted the relevant audit report to the concerned RO of NABARD.

3. Only current short term crop loans are eligible for conversion for period up to 05 years for SF / MF / OF.

4. Refinance support from NABARD will be available in respect of conversion/ rephasement/ reschedulement of loans subject to fulfillment of prescribed conditions as mentioned in Annexure II and any other instructions issued from time to time. The sharing pattern for MT (Conversion) would be as under:

a) NABARD refinance - 60%, State Govt. share - 15% and StCB / CCB's share - 25%

b) The proportionate share of NABARD in the insurance claims, if any, subsequently settled by the General Insurance Corporation (GIC) / other insurance companies will have to be passed on to NABARD immediately.

c) MT (Conversion) assistance from NABARD will be restricted to 2 years in case of crop loss between 33% and 50% and up to maximum of 5 years in case crop loss is 50% or more (including period of one year moratorium, reschedulement, rephasement etc., if any), in accordance with the provisions contained in Sec. 22 of the NABARD Act, 1981.

5. The other terms and conditions for extension of refinance to banks against MT (conversion/ rephasement / reschedulement) loans will be as under:

(a) The financial assistance will be provided by NABARD to StCBs only against the guarantee of the State Government in regard to repayment of principal and payment of interest as per the said provisions.

(b) The rate of interest on refinance on MT conversion/ rephasement/ reschedulement of loans for F. Y. 2022-23 will be 300 basis points below that charged by Banks to the ultimate beneficiaries subject to a minimum interest rate of 8.10% p.a. or as decided by NABARD from time to time. The rate of interest charged by the banks would be as per the RBI guidelines.

(c) In the event of default in repayment of principal and payment of interest, the StCB will be liable to pay to NABARD, interest on the amount of default at 10.25% p.a. for the period for which the default persists. The penal interest rates are subject to revision from time to time.

(d) Normally one to three months' time is provided for drawal of NABARD refinance from the date of sanction for enabling the banks to complete the necessary formalities and extension is provided on merits of each case. For reporting purpose, the period is taken as 04.2022 to 31.03.2023.

(e) The refinance will be available against State Government guarantee. State Government's commitment to provide its prescribed (15% share) will also is required.

(f) Suspension/remission of land revenue by revenue authority/State Government

(g) The process of conversion starts at PACS level and ends at NABARD level. The conversion should be effected before due date of crop loan.

6. The affected borrowers whose ST (SAO) loans have been converted into MT (Conversion) loans have to be extended fresh crop loans as per their eligibility, scale of finance, repaying capacity etc. for raising fresh crops.

7. For the purpose of prudential norms and NPA classification about the treatment of agricultural loans affected by natural calamities, norms fixed by RBI should be followed.

8. Proposal for conversion should be submitted to the concerned Regional Office of NABARD within one year, from the date of actual conversion at farmer's level.


Annexure II

Formalities / Pre-requisites for permitting conversion of ST (SAO) loans

The following formalities / pre-requisites are suggested for providing conversion facilities:

1.(a) In the event of a natural calamity, the Central/State Government may decide on the declaration of natural calamities by conducting crop-cutting experiments to determine the loss in crop yield and issue declarations/certificates. The crop loss in the particular area/taluka/mandal/block (as the case may be) should be 33% or more to trigger reschedulement of loans from banks.

1.(b) In case of extreme situations such as wide-spread floods, etc. when it is largely clear that most of the standing crops have been damaged and/or land and other assets have suffered a wide-spread damage, the matter be deliberated by State Government/District Authorities in the especially convened SLBC/DCC meetings where the concerned Government functionary/District Collector shall explain the reasons for not estimating 'Annewari' (percentage of crop loss - by whatever name called) through crop cutting experiments and that the decision to provide relief for the affected populace needs to be taken based on the eye estimate/visual impressions.

In both the cases, however, DCCs/SLBC have to satisfy themselves fully that the crop loss has been 33% or more before acting on these pronouncements.

2. Ordinarily, banks may convert/rephase/reschedule only the principal amount of crop loans/ installments of MT (Conversion) loans due in the year of occurrence of natural calamity from the affected farmer-borrowers. However, in case of severe damage to crops as declared by the State Governments and accepted by SLBC/Task Force/Steering Committee constituted for the purpose, the amount of interest due from Small Farmers / Marginal Farmers in respect of the loans eligible for conversion/rephasement/ reschedulement could be deferred for one year. The individual banks concerned will have to exercise their discretion in regard to the need for deferment of interest in respect of other farmers. Further, banks could allow interest deferment only if, their resource base permits the same, without resorting to any financial assistance from higher financing agencies.

3. The repayment period of restructured loans may vary depending on the severity of calamity and its recurrence, the extent of loss of economic assets and distress caused. Banks may allow a maximum period of repayment of upto 2 years (including the moratorium period of 1 year) if the loss is between 33% and 50%. If the crop loss is 50% or more, the restructured period for repayment may be extended to a maximum of 5 years (including the moratorium period of 1 year).

4. In all cases of restructuring, moratorium period of at least one year should be considered. Further, the banks should not insist for additional collateral security for such restructured loans.

5. Banks may not levy any additional interest and consider waiving such interest if already charged, in respect of loans converted / rephased / rescheduled by them.


This is to certify that the Standing Crops for the Kharif / Rabi* season for the year in the following villages were damaged due to (state the type of natural calamity) and the yield in terms of "annewari" was less than 6 annas i.e. less than 50% / is between 33% to 50% ( i.e. -----% ) of the normal yield ( whichever is applicable ).

Sr. No. Name of the village Name of crop damaged Extent of damage in terms of percentage or annas
1 (a)

* Strike out whichever is not applicable.

It is also certified that the procedure for annewari assessment has been streamlined on the basis of the various recommendations of the Working Group on 'Scientific Method of Assessing Crop Yield in the Event of Natural Calamities for Conversion of Short term Production Loans into Medium Term and Long Term' appointed by the Government of India, Ministry of Agriculture in January 1980 and the following concept / basis in particular have been followed while declaring "annewari".

a) Area concept: In determining the crop for assessment of yields, the area concept has been followed i.e. the crops that covered 70% of the normal cropped area in the district have been taken into account.

b) Comparison of yields: The yields for the affected year have been compared with the average of yields of the preceding five years.

c) Scientific methodology: The average crop yield has been estimated by adopting scientific methodology i.e. by crop cutting experiments.

d) Annewari:On the basis of comparison of per hectare yield of crop /crops for the affected region, the District Level Committee has certified that the yield has gone down by 50% or more / between 33% to 50% ( whichever is applicable ) in the affected areas and accordingly, the Revenue Department has declared "annewari" for these areas.

Signature of the District Collector / Authorized Revenue Official and Seal:


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