1.14 — Distressed agricultural loans

When dealing with distressed agricultural loans, banks should:

  • ensure that those loans are managed by experienced agricultural bankers;
  • offer farm debt mediation as soon as a loan is classified as distressed;
  • manage every distressed loan on the footing that working out will be the best outcome for bank and borrower, and enforcement the worst;
  • recognise that appointment of receivers or any other form of external administrator is a remedy of last resort; and
  • cease charging default interest when there is no realistic prospect of recovering the amount charged.

Government Response

The Government supports banks acting on this recommendation.