Mumbai: Reserve Bank of India (RBI) has directed all commercial banks not to recover crop loans including the accrued interest in the current financial year from farmers in the drought affected states in the country.

"In consultation with the government of India, it has been decided not to effect any recovery of crop loans, including interest during the current financial year in states affected by the failure of the South West monsoon," RBI said.

Prime Minister Atal Behari Vajpayee had on November 13 announced that government will not recover crop loans this year and set up a Rs 500 crore corpus to provide relief to plantation growers during depressed market conditions.

Accordingly, RBI said, all scheduled commercial banks have been advised that for Kharif 2002-03, reliefs may be extended to farmers affected by drought in the districts notified by the respective state governments.

The relief measures charted out by the apex bank are no recovery of any amount either by way of principal or interest during the current FY in respect of kharif crop loan.

"The principal amount of crop loan should be converted into term loan and will be recovered over a period of minimum five years (earlier three years) in case of small and marginal farmers and four years in case of other farmers," RBI added.

The regulator has also asked banks to defer interest due in the current FY on crop loans nor should they charge any interest on the deferred interest.

PTI