Query:- if there is machinery loan under Agri Sector so the IRAC norms will be 90 days or agri terms short term or long term crop kindly help
Answer:-An agricultural term loan for machinery (such as a tractor or other implements) is classified as a Non-Performing Asset (NPA) based on crop seasons, rather than the standard 90-day rule
.
Based on the provided sources, here is the detailed breakdown of how these norms apply:
1. Categorization as Farm Credit
Loans for the purchase of agricultural implements and machinery are specifically categorized under Farm Credit (Medium and long-term loans)
. According to regulatory directions, the special NPA norms for agriculture apply specifically to "Farm Credit" extended to agricultural activities
.
2. NPA Classification Triggers
Because these term loans are linked to the agriculturist's ability to pay from harvest proceeds, their classification depends on the duration of the crops grown by the borrower:
Short Duration Crops: The loan is treated as an NPA if the installment of principal or interest remains overdue for two crop seasons
.
Long Duration Crops: The loan is treated as an NPA if the installment of principal or interest remains overdue for one crop season
.
3. Applicability to Term Loans
The sources explicitly state that these crop-season-based NPA norms are applicable to agricultural term loans availed of by agriculturists, depending on the duration of the crops they raise
. This is a recognized departure from standard commercial loans to ensure that repayment schedules are realistically aligned with harvesting and marketing cycles
.
4. Exceptions
Non-Farm Credit: If a loan is given to a farmer but does not qualify as agricultural finance (for example, a personal housing loan), the standard 90-day delinquency norm applies
.
Natural Calamities: If a crop yield is affected by a declared natural calamity, the term loan can be restructured or rescheduled
. In such cases, the asset classification will thereafter be governed by the revised terms of the restructuring
.