Rajasthan

• 22 Mar 2025

One Time Settlement Scheme

Why in News? 

The Rajasthan government has announced the implementation of One Time Settlement Scheme (OTS) for farmers and small entrepreneurs . 

Key Points 

• About the Scheme: 
  • Its main objective is to protect farmers and small entrepreneurs from financial crisis and to ensure the stability of land development banks . 
  • Under this scheme, if the borrowers deposit 100% of the principal amount of medium and long term loans which have become overdue by 1st July 2024, then they will be given 100% rebate in interest. 
  • Under this scheme, borrowers repaying the full principal of overdue medium and long-term loans by 1st July 2024, will receive a 100% interest rebate. 
    • A facility of 5 % subsidy will also be provided, which will enable the eligible loan members to avail the loan again. 
  • This scheme will benefit 36,351 defaulting loan members associated with Land Development Banks . 
  • Due to various calamities, farmers could not repay the loan installments on time, due to which the overdue loan of Cooperative Land Development Banks has reached Rs. 760 crores. 
    • To improve this situation, the government will spend Rs 200 crore , which will not only make recovery of loans easier but will also improve the financial condition of the banks. 
• Importance of the Scheme: 
  • This scheme will help the farmers in getting new loans and increasing their production capacity . 
  • This scheme will provide financial relief to small businessmen , so that they can re-establish and strengthen their business . 
  • This scheme will improve the loan recovery rate of land development banks . 
    

Land Development Bank 

• About: 
  • 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 the year 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. 
• Loan disbursement and repayment: 
  • Land Development Banks provide long term loans for a period of 20 to 30 years . 
  • The loan amount is usually up to 50% of the land value or 30 times the annual revenue 
  • Complete verification of land ownership, income and loan requirement is done before loan is provided . 
  • The interest rates are usually 11-12% so that farmers can repay it easily.