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Banks to liberally extend financial assistance in Maharashtra

Reserve Bank of India on 28th July 2005 advised banks to liberally extend its relief package for the State of Maharashtra which has witnessed unprecedented rains leading to floods and destruction of life and property.

Bank branches have been directed to provide financial assistance to the agriculturists, small scale industrial units, artisans, small businesses and trading establishments affected by the calamity.

The measures include consumption loans to persons affected by calamities for sustenance, waiver of margin requirements or considering as margin the grants, subsidies provided by state governments, provision of credit not only to existing borrowers but also to other eligible persons as also conversion and rescheduling/restructuring of existing loans.

The package also includes providing to affected persons term loans for developmental purposes. Further, banks while using their discretion on charging of interest are required to view such cases sympathetically and consider waiving of penal interest to be charged for default of current dues and deferment of compounding of interest.

In addition to the above, banks have been advised to increase the limit of consumption loan to be provided to the affected persons in the state upto Rs 5,000 without any collateral. The limit may be enhanced to Rs.10,000 at the discretion of the branch manager, depending on the repaying capacity of the borrower. Further, the banks have been asked to expeditiously restore banking services in the affected areas.

Banks may also consider provision of financial assistance for the purpose of repairs/reconstruction of dwelling units and also to small road transport operators including taxi, auto rickshaw operators affected by the calamity, keeping in view the viability of the proposals.

>>> Read more RBI guidelines

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