Kisan Credit Card Overdue at the 30 June Review

The 90-day rule is not the operative test here. The general IRAC norm - overdue for more than 90 days - applies to most advances, but direct advances to agriculture are governed by the crop-season norm: a loan for a short-duration crop (under one year, as soybean and wheat here) is treated as NPA only when the instalment of principal or interest remains overdue for two crop seasons; for long-duration crops the trigger is one crop season.

Applying it:

• The instalment fell due on 31 March, at the end of rabi.
• On 30 June only one crop season (rabi) has elapsed; the kharif season closes around September–October.
• Therefore the account is not yet NPA at 30 June. It is a standard but seriously stressed account and must be reported internally as such (watch/special-mention list, overdue flagged in the review note).

Provisioning: because the account is standard, only standard-asset provisioning for direct agriculture advances applies - not the sub-standard rate. If the second season also passes without repayment (i.e. after the kharif harvest), the account becomes NPA: interest is no longer recognised as income, and sub-standard provisioning (15% on the secured portion, higher on the unsecured exposure) becomes payable. Confirm the exact standard-asset rate in the bank's current IRAC circular, since rates are revised.

Do not miss the subvention angle: the KCC interest-subvention and prompt-repayment incentive are linked to payment by the due date; a 91-day delay generally forfeits the incentive and changes what the borrower actually owes. That should be stated in the notice to him, because it is usually the fact that persuades a borrower to pay.

Reject it. The proposal is textbook evergreening: a fresh disbursement whose only real purpose is to move an overdue account into "current" so that classification and provisioning improve. Points that make it indefensible:

1. No genuine end-use. The new money would not finance a crop or an asset; it would simply be recycled to clear an existing instalment of the same borrower. The loan document would state a purpose that is not true.
2. The account's risk does not change. The borrower's repayment capacity, crop position and cash flow are identical before and after the transaction; only the ledger label changes.
3. Misreporting. The branch's review note, the bank's CRILC/regulatory returns and the provisioning figures would all understate stress. That is a reporting violation, not a technicality.
4. Accountability is personal. Statutory auditors and the RBI's inspection team routinely trace loan-to-loan adjustments through voucher scrutiny and cash-flow statements; the branch head and the recommending officer carry the exposure, not the sarpanch.
5. The political assurance is worthless. A verbal claim about a loan write-off is not a sanction. Waivers require a government order and a board resolution with a defined eligibility cut-off; no such order exists for this block.

A quick check the branch can do: if the top-up disbursement voucher is dated within days of the overdue instalment and the credit is applied to that same instalment, the pattern is self-evident on the face of the ledger. Say no in writing, with reasons recorded.

Compliant sequence:

1. Verify the facts of distress. Visit the field, record the crop condition, acreage and expected kharif yield. Sympathy is not enough; the file must show evidence, since that same evidence supports any restructuring later.
2. Issue a written demand/reminder stating the overdue amount, the additional interest on delay, and the loss of the prompt-repayment incentive. Many KCC accounts are regularised simply because the borrower did not know the incentive was at risk.
3. If genuine distress exists and the bank's board-approved policy permits, restructure: reschedule the due date, or convert the short-term production loan into a term loan with a repayment schedule matched to the kharif harvest. Requirements: borrower's written consent, a fresh agreement, the sanction of the competent authority, and entry in the register of restructured accounts. Since no calamity has been declared, there is no automatic dispensation - everything rests on the bank's own policy.
4. Provision correctly for whatever classification results, including the higher provisioning that restructured standard advances attract under prudential norms. Confirm the rate from the current circular.
5. Record the review in the board note with a candid classification, so that no later auditor can allege suppression.

Must not be done: fresh disbursement to adjust overdue instalments; suppressing the overdue in the review note; promising the borrower a waiver the branch cannot deliver; or allowing a political functionary to sit in on the appraisal.