(a) whether the Government propose to abolish the system of charging compound interest
on agricultural loan;
(b) if so, the details thereof; and
(c) the time by which the final decision is likely to be taken in this regard?
(a) whether the Government propose to abolish the system of charging compound interest
on agricultural loan;
(b) if so, the details thereof; and
(c) the time by which the final decision is likely to be taken in this regard?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI BALASAHEB VIKHE PATEIL):
(a) to (c) Policy gudielines for charging interest on loans to agriculture are laid down
by Reserve Bank of India (RBI). As per the extant guidelines of RBI, the scheduled commercial
banks are advised to charge simple interest on loans to agriculture and compound interest
only when it is not repaid to the bank on due date which is the date fixed taking into
consideration the fluidity with borrower and harvesting/marketing season.