Section 23 of The National Bank for Agriculture and Rural Development Act, 1981
Where the National Bank is satisfied that owing to unforeseen circumstances the rescheduling of any loans and advances made to artisans, 1[village and cottage industries, micro enterprises, small enterprises and medium enterprises and those engaged in the field of handicrafts, handlooms and other rural crafts], by any State co-operative bank, regional rural bank or any such financial institution or any financial institution falling under such class of financial institutions as may be approved by the Reserve Bank in this behalf, has become necessary, it may provide to such bank or institution such financial assistance as it may deem fit by way of loans and advances repayable on the expiry of fixed periods not being less than eighteen months and not exceeding seven years against such securities as may be specified in this behalf by the National Bank: Provided that no loan or advance shall be made under this section to a State co-operative bank unless such loan or advance is fully guaranteed as to the repayment of the principal and payment of interest, by the State Government but such guarantee may be waived by the National Bank if other security to the satisfaction of the National Bank is furnished, or if, for reasons to be recorded by it in writing, the National Bank is satisfied that the guarantee or other security is not necessary.
Summary
- The National Bank can step in to provide financial assistance when "unforeseen circumstances" require rescheduling loans previously made to artisans, village industries, small enterprises, and handloom workers.
- This assistance is given to State co-operative banks, regional rural banks, or other approved financial institutions.
- If the loan is given to a State co-operative bank, it normally requires a full guarantee from the State Government.
- However, the National Bank has the power to waive this State Government guarantee if other satisfactory security is provided, or if they record in writing that the guarantee is unnecessary.
Practical examples
FAQ
1. Who are the end-beneficiaries of the rescheduled loans under this section?
Artisans, village and cottage industries, micro/small/medium enterprises, and people engaged in handicrafts, handlooms, and other rural crafts.
2. Can the National Bank ignore the rule requiring a State Government guarantee?
Yes, the National Bank can waive the guarantee if other satisfactory security is provided or if they decide and record in writing that the guarantee is not necessary.
Test yourself
Q1.Under Section 23 of The National Bank for Agriculture and Rural Development Act, 1981, what is the minimum duration for a loan granted for rescheduling credit to artisans?
Q2.Under Section 23 of The National Bank for Agriculture and Rural Development Act, 1981, what broad condition must the National Bank be satisfied has occurred to justify rescheduling loans for small enterprises?
Q3.Under Section 23 of The National Bank for Agriculture and Rural Development Act, 1981, when providing assistance to a State co-operative bank, under what condition can the National Bank waive the requirement for a State Government guarantee?
Q4.Under Section 23 of The National Bank for Agriculture and Rural Development Act, 1981, which of the following groups is NOT listed as a target for the rescheduled loans under this provision?