One Time Settlement Scheme

• 23 Apr 2025

Why in News? 

The Rajasthan government has implemented One Time Settlement Scheme (OTS) with the aim of providing relief to farmers and small entrepreneurs and strengthening the financial position of land development banks . 

Key Points 

• About the Scheme: 
  • The Rajasthan government had announced it in the budget for the financial year 2025-26 and its first phase will be effective from 1 May to 30 September 2025. 
  • This scheme will be applicable to loans disbursed by Rajasthan Minorities Finance and Development Cooperative Corporation Limited (RMFDCC) , which were overdue by 31 March 2024. 
  • Eligible borrowers are required to make a lump sum payment of the entire outstanding principal by September 30, 2025. 
  • On making a lump sum payment, 100% waiver will be given on simple interest and penal interest. 
  • The benefit of the one-time settlement scheme will be available to 36,351 loanee members associated with Land Development Banks. 
  • The scheme aims to recover overdue loans worth Rs 760 crore . 
  • The loanee members will be eligible to avail re-loan with 5% subsidy under the scheme. 
  • An expenditure of Rs 200 crore has been proposed by the state government for this scheme. 
• Importance: 
  • The state government will get help in recovering the outstanding loan . 
  • The financial burden on the borrowers will be reduced, which will encourage them to join other schemes. 
  • Confidence and participation in government schemes will increase among the minority community . 
  • This will develop a sense of awareness and responsibility towards loan repayment 

 Land Development Bank 

• Introduction: 
  • Land Development Banks (LDB) are  co-operative banks established specifically for agriculture and rural development. 
  • These banks provide long term loans, which are mainly given to farmers for land improvement , irrigation, horticulture, purchasing agricultural equipment, animal husbandry and other agriculture related activities . 
• History: 
  • The first land development bank in India was established in 1920 at Jhang in Punjab. 
  • After this, another bank was established in Chennai in 1929, with which the expansion of land development banks started. 
• Sources of Finance: 
  • Grants and assistance by Central and State Governments. 
  • Financing for agriculture and rural development. 
  • Issue of bonds to raise long term finance. 
  • Loans from various co-operative and commercial banks.