The Reserve Bank on Wednesday said it has instructed banks to restructure loans of farmers whose crops have been damaged by the recent unseasonal rains and hailstorms. "We have given instruction to banks to restructure farm loans," RBI Governor Raghuram Rajan told reporters here. Unseasonal rains and hailstorms in northern and central parts of India last month have damaged rabi (winter-sown) crops in about 113 lakh hectares.
Earlier today, Prime Minister Narendra Modi announced higher compensation for farmers whose crop have been damaged by unseasonal rains and also asked banks to ease criteria for them to avail government support.
Modi also asked insurance companies to be "proactive" in settling claims of farmers. He said the criteria of 50 percent crop damage for providing compensation to affected farmers has been reduced to 33 percent, which will help more farmers to get compensation for their crop loss.
"Second important decision we have taken is to raise the parameters for helping him (farmers). The amount of compensation has been increased to 1.5 times. If earlier, he was getting Rs 100 as compensation, now he will get Rs 150, if it was Rs 1 lakh, he will get Rs 1.5 lakh... a 50 percent increase," Modi added.
In its monetary policy yesterday, the RBI said that the adverse impact of unseasonal rains and hailstorms in March is still unfolding. "Initial estimates indicate that as much as 17 percent of the sown area under the rabi crop may have been affected though the precise extent of the damage remains to be determined," said the policy document.
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