Naveen Asks Interest Incentive

Chief Minister Naveen Patnaik today urged Prime Minister Narendra Modi to keep the interest rate on Medium Term (conversion) loans at par with crop loans and extend the interest incentive of 3 percent admissible on crop loans to MTC loans. 

 
In a letter to the Prime Minister, Mr.Patnaik said the State government, in order to help the farming community suffering crop loss, has already initiated pro-active measures to provide relief to the affected farmers promptly.
 
“As a part of the package announced for the farming community, it has been decided to convert crop loans advanced during Kharif 2017 season in the affected areas as medium term (conversion) loans”, he said, adding in case of crop damage between 33 pc and 50 pc, the crop loans can be converted into medium term (conversion) loans payable within a period of two years with a moratorium of one year.
 
“Similarly, where crop damage if 50 pc and more, the conversion facility of crop loans can be allowed for a maximum period of five years with one year moratorium”, the chief minister said. 
 
Mr.Patnaik said the Union government provided interest incentive at 3 percent to prompt paying farmers in respect of crop loans, which is not made available in case of conversion of such crop loans in the event of occurrence of natural calamities. “As a result, the interest rate on converted loans remains at a higher rate, which is at present 11.20 pc. Similarly, the interest on crop loans is not subsidized as interest subvention for the same is not available”, he said, adding when crop loans are converted in to medium term loans, the interest rate should remain at par with the crop loans.
 
“Similarly, the incentive made available to the prompt paying farmers for crop loans should also be extended to the medium term (conversion) loans to provide relief to the farmers due to drought and pest attack”, the chief minister stated. 
 
Notably, the State government officials had recently said the policy of the Centre and National Bank of Agriculture and Rural Development (NABARD) has emerged as  a stumbling block for implementation of the State government’s decision to convert crop loans to medium term (conversion) loans.   
 
This issue was raised before the Union Minister of State, Agriculture, Gajendra Singh Shekhawat on November 12 here by the State officials during a review meeting convened to review the drought and pest attack situation in Odisha. Special Relief Commissioner (SRC) Bishnupada Sethi, Principal Secretary Agriculture, Saurabh Garg and Managing Director Odisha State Cooperative Bank, Tushar Kanta Panda and other officials were present in the meeting.
 
Officials said that it is expected that around Rs1,000 crore of crop loans advanced in the affected areas would be converted into medium term (conversion) loans. However, because of the policies of the Government of India and NABARD, the conversion process may get affected including the current financing for Rabi crop loans, pointed out officials.  
 
The District Cooperative Banks have been providing around 65 percent of crop loans dispensed in the State. During the last Kharif season, Rs 5,640 crore were advanced and during the current Rabi, a target of Rs 5,000 crore has been given to the co-operatives. 
 
The commercial banks including the Regional Rural Banks had financed around Rs 3,036 crore during Kharif. Similar target of Rs 5,000 crore has been given to them for current Rabi season. In the drought and pest affected areas, the crop loans advanced during Kharif 2017 will be converted to Medium Term (Conversion) loans. 
 
In case of crop damage between 33 pc and 50pc, due to drought and pest attack, the crop loans shall be converted to medium term (conversion) loans repayable over a period of two years with a moratorium of one year. 


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