Section 22
Conversion loan for production credit.
The National Bank for Agriculture and Rural Development Act, 1981
About this Act
An Act to establish a development bank to be known as the National Bank for Agriculture and Rural Development for providing and regulating credit and other facilities for the promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to promoting integrated rural development and securing prosperity of rural areas and for matters connected therewith or incidental thereto.
1[22. Conversion loan for production credit.-- Where the National Bank is satisfied that owing to
drought, famine or other natural calamities, military operations or enemy action, any State co-operative
bank, central co-operative bank, regional rural bank or any such financial institution or any financial
institution falling under any such class of financial institutions, as may be approved by the Reserve Bank
in this behalf, requires assistance under this section, it may provide to such bank or institution such
financial assistance as it may deem fit by way of making loans and advances repayable on the expiry of
fixed periods not exceeding seven years and on such terms and conditions as may be specified in this
behalf by the National Bank:
Provided that loans and advances may be made under this section only for the purpose of enabling the borrowing bank or institution,--
(a) to pay any dues to the National Bank for credit extended for financing agricultural operations or the marketing of crops under clause (i) of sub-section (1) of section 21, or
(b) (i) to make loans or advances to central co-operative banks or primary rural credit societies in cases where the borrowing bank is a State co-operative bank, and
(ii) to make loans and advances to primary rural credit societies in cases where the borrowing bank is a central co-operative bank,
and such loans or advances in both the cases being repayable on the expiry of fixed periods not being less than eighteen months and not exceeding seven years, by way of reimbursement of loans and advances made by such co-operative banks or societies for agriculture or agricultural operations or for reimbursement of such loans or advances which have been converted into loans or advances repayable on expiry of fixed periods not being less than eighteen months and not exceeding seven years from the date of conversion:
Provided further that no loan or advance shall be made under this section to a State co-operative bank or a central 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.]
Provided that loans and advances may be made under this section only for the purpose of enabling the borrowing bank or institution,--
(a) to pay any dues to the National Bank for credit extended for financing agricultural operations or the marketing of crops under clause (i) of sub-section (1) of section 21, or
(b) (i) to make loans or advances to central co-operative banks or primary rural credit societies in cases where the borrowing bank is a State co-operative bank, and
(ii) to make loans and advances to primary rural credit societies in cases where the borrowing bank is a central co-operative bank,
and such loans or advances in both the cases being repayable on the expiry of fixed periods not being less than eighteen months and not exceeding seven years, by way of reimbursement of loans and advances made by such co-operative banks or societies for agriculture or agricultural operations or for reimbursement of such loans or advances which have been converted into loans or advances repayable on expiry of fixed periods not being less than eighteen months and not exceeding seven years from the date of conversion:
Provided further that no loan or advance shall be made under this section to a State co-operative bank or a central 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.]
Notes
1. Subs. by s. 3, ibid., for section 22 (w.e.f. 19-9-2003).