Reserve Bank of India has relaxed the non-performing asset norms for agriculture finance and has brought loans for storage facilities under the priority sector.

Under the new norms, loan granted for short duration crops would be treated as an NPA if the installment of the principal or interest thereon remains unpaid for two crop seasons beyond the due date, the central bank said in its bi-annual Credit Policy statement.

The Monetary and Credit Policy 2004-2005

A loan granted for long duration crops would be treated as an NPA if the installment of the principal or interest thereon remains unpaid for one crop season beyond the due date, it said.

RBI said loans to storage units, including cold storage units, which are designed to store agricultural produce, irrespective of their location, would be treated as indirect agricultural finance under the priority sector.

Emphasising on securitisation of agricultural loans, it has proposed that investments by banks in securitised assets representing direct (indirect) lending to agriculture would be treated as their direct (indirect) lending under priority sector, provided the securitised loans are originated by the banks and financial institutions.

RBI has prescribed that banks may waive margin/security requirements for agricultural loans upto Rs 50,000.