Punjab’s OTS Policy a Major Boost to Industrial Sector, Farmers



Farmers are supposed to be the backbone of any economy and in Punjab where majority of the population is dependent on agriculture as their source of livelihood, farming sector is on top priority of the government.

The year 2015 brought cheer to the farmers of Punjab when government announced the One Time Settlement (OTS) scheme giving them an opportunity to those farmers who had defaulted on loans to clear their dues with a simple interest of 9 percent per annum. They had been declared as defaulters of the Primary Cooperative Agricultural Development Banks (PADBs).

The scheme pertained to loans advanced by PADBs, which had become overdue on or before June 30, 2014. However this scheme was for those who are willing to come under its ambit while in case of those who did not intend to clear their dues, the  banks were given the authority to recover the amount on their own.

The scheme was liberal as farmers were asked to clear 25 percent of the amount on the day of settlement, and remaining within a year in two installments, but in case they settled the entire amount in one month no interest was charged. However in case of default they were there was a provision to get the recovery done as per rules and regulations.

Meanwhile, Industrialists in Punjab last year got a major relief from the Punjab government through the One Time Settlement (OTS) Policy 2015 when it was decided to rehabilitate those small and medium units who had taken loans but could not pay back as they suffered losses due to recession.

These dues had been pending with the Punjab State Industries Development Corporation (PSIDC), Punjab Agro Industries Corporation (PAIC) and Punjab Financial Corporation (PFC). Under the said policy three types of cases were taken up, which included equity investment cases, loan cases and loss assets cases.

While PSIDC promotes industrial development in the state, PFC performs the role of development bank. PAIC is responsible for promoting agro-based industries in the state. While PSIDC was to recover Rs 200 crore, PFC was Rs 50 crore and PAIC Rs 25 crore.

The policy brought the much needed revival of several small industrial units, besides also 70 large and medium scale industrial projects. It was felt that the industrial investment was blocked, following which OTS came into being. Even those industrial units were benefitted which were not doing well because of other reasons like poor demand etc.

Finance Minister, Parminder Singh Dhindsa had explained how economic slowdown had affected the industry. Under this policy the sick units have been revived through the state financial institutions and the government had even waived off loads of 782 units besides setting Rs 900 crore worth interest.

It was also decided that those not opting for the OTS policy, their assets would be transferred to Asset Reconstruction Company (ATC). In addition their information will be shared with the Reserve Bank of India (RBI) and they will be categorised as defaulters, and will not be allowed funding in future.

BOX: How OTS Policy for Industrial Units Works?

  • Equity Investment Cases: Investment plus 10 percent interest
  • Loan Cases: Outstanding principal amount plus interest

Loss Assets Cases: Outstanding principal amount plus expenses

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