ADVERTISEMENT

RBI Asks Banks To Ensure Adequate Cash Supply For Farm Sector

Banks asked to ensure adequate cash supply to district cooperative banks and regional rural banks

RBI Asks Banks To Ensure Adequate Cash Supply For Farm Sector

The Reserve Bank of India has advised banks to manage their currency chests to ensure district central co-operative banks and regional rural banks get adequate cash to disburse loans to farmers during the ongoing Rabi, or winter crop, season.

“It is imperative that farmers are adequately supported financially to ensure unhindered farming operations,” the RBI said in a notification on its website today.

Since the central government’s announcement on November 8 on demonetisation of Rs 500 and Rs 1,000 notes, restrictions on cash withdrawals has resulted in a paucity of currency in circulation.

To ensure that farmers get access to cash, the government on Thursday raised the withdrawal limit for farmers to Rs 25,000 per week against crop loans sanctioned by banks subject to loan limits.

The central bank estimates that district cooperative banks will require around Rs 35,000 crore for crop loans to the farmers at Rs 10,000 crore per week. Of the total, the National Bank For Agriculture and Rural Development (NABARD) will utilise its own cash credit limits up to Rs 23,000 crore.

As many of these loans will be disbursed in cash to facilitate farming related expenses, we advise in this regard that banks with currency chests should ensure adequate cash supply to the DCCBs (co-operative banks) and RRBs (regional rural banks).
RBI Press Release