Easing further the usage of old currency, the Finance Ministry Monday allowed farmers to use Rs 500 notes to buy seeds from state or central government outlets and agriculture universities. This is aimed at helping farmers ahead of the Rabi planting season. Watch What Else Is making News The Reserve Bank of India (RBI) allowed companies to withdraw Rs 50,000 per week from their overdraft and cash credit accounts, over and above the Rs 50,000 per week cash withdrawal that firms have already been allowed from their current accounts. Withdrawal from personal overdraft accounts has not been allowed. The central bank also provided additional 60 days for repayment of housing, crop, farm and microfinance loans worth up to Rs 1 crore. This relaxation is applicable to loans payable between November 1 and December 31, the RBI said in a notification. These measures are aimed at helping sections of people adversely affected by the cash crunch following the government’s decision to withdraw old Rs 500 and Rs 1000 notes from circulation. Farmers can buy seeds with old Rs 500 notes from 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 the farmers are suitably facilitated during the Rabi season,” the Ministry said. On withdrawal from the overdraft and cash credit accounts, the RBI said that holders of such accounts, which are operational for the last three months or more, may now withdraw up to Rs 50,000 in cash, in a week. The RBI added that the Rs 50,000 withdrawals may be disbursed mainly in Rs 2,000 denomination bank notes. To ensure that the repayment schedule of borrowers is not affected due to shortage of currency, the RBI allowed banks, non-banking finance companies (NBFCs) and housing finance companies a leeway of 60 days for terming unpaid loan accounts of up to Rs 1 crore as substandard. “It has been represented to us that consequent upon withdrawal of the legal tender status of the existing Rs 500 and Rs 1,000 notes, small borrowers may need some more time to repay their loan dues. Taking these representations into consideration, it has been decided to provide an additional 60 days beyond what is applicable for the concerned regulated entity (RE) for recognition of a loan account as substandard,” the RBI said in a notification. This 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,” the RBI said. The banking regulator said 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. The step will ensure that a borrower’s credit score is not impacted negatively due to non-payment for days. The financial institutions will not have to make additional provisions out of their profits due to such non-repayment. Limit of cash withdrawal of Rs 24,000 per week and non-availability of currency in many parts of the country has affected transactions in the economy. This has hit the ability of borrowers to repay loans on time. The RBI said the 60-day leeway should only apply to defer the classification of an existing standard asset as substandard. This cannot be used for delaying the migration of an account across sub-categories of NPA.
