only for loans provided by these banks and are only for medium and long-term loans to
the private sector. The fund guarantees upto 60% of the loan value plus interest.
Presently many of these agricultural loans provided under government mandated
programmes are now not performing. This is especially true with the passing of a law
in 1996 which provides defaulting borrowers with unrestricted access to fresh loans and
for rescheduling of bad debts in 1997 and 1998. Hence, to the extent that the
government does not honours its guarantees with respect to these non performing loans,
the recognition of these losses is just being delayed to a future budgetary period.