Economics · Economy
A farmer in a drought-prone district has an existing crop loan of 2,00,000 rupees. Due to a severe moisture stress event, the state government declares a crop loss of 40 percent in that block. As per the RBI Master Directions on Relief Measures by Banks in Areas Affected by Natural Calamities, which of the following is a correct procedural requirement for restructuring the short-term loan into a term loan?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The bank must charge a penal interest rate of 2 percent extra for the restructured period to compensate for the loss of liquidity.
- 2For crop loss exceeding 50 percent, the repayment period can be extended up to 5 years (including a moratorium of 1 year).
- 3For crop loss between 33 percent and 50 percent, the bank can allow a maximum repayment period of 2 years (including a moratorium of 1 year).✓
- 4The bank must grant a moratorium of at least one year and the restructured period should be at least five years regardless of the extent of loss.
Correct answer
For crop loss between 33 percent and 50 percent, the bank can allow a maximum repayment period of 2 years (including a moratorium of 1 year).
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