Banks to be get Rs.250 bn against farm loan waiver (Lead)
New Delhi, Aug 27 : The coming session of parliament beginning Oct 17 will see the
government releasing Rs.25,000 crore (Rs.250 billion) to the banks to help them make up
the loss incurred on account of farm loan waiver, said a senior finance ministry official
Wednesday.
"Rs.25,000 crore will be released to the lending institutions (against the debt waiver)
when parliament meets to approve the supplementary budget," said financial sector
secretary Arun Ramanathan.
Ramanathan, who briefed the media after Finance Minister P. Chidambaram reviewed the
performance of regional rural banks (RRBs) in a closed door meeting, said the government
was yet to take a decision on the suggestion by the banks that payment be made against
interest from March 1.
Sources said RRBs officials raised the issue of liquidity crunch arising out of the
delay in releasing the relief package.
"It is the farmers who are going to suffer if the relief package is not released soon.
The banks are faced with liquidity crunch to meet farmers' fresh loan demands," an RRB
official, who did not wish to be identified, told IANS.
"The finance minister assured us that the Reserve Bank of India (RBI) and the National
Bank for Agriculture and Rural Development (Nabard) will look into the matter," he
added.
"The banks have requested the government to pay interests arising out of the delay in
releasing funds for the loan waiver scheme," said Ramanathan.
The government initially announced a total farm loan waiver of Rs.60,000 crore (Rs.600
billion), but subsequently increased it to Rs.71,680 crore (Rs.716.8 billion) to cover
nearly 43 million small and marginal farmers.
About Chidambaram's brief to the RRBs, Ramanathan said he emphasised the need for
computerisation of RRB branches and providing better training to the employees.
"The finance minister was satisfied with the performance of the RRBs," Ramanathan said,
adding the number of RRBs would come down to 79 from the existing 88 after 12 RRBs were
merged and reduced to five.
"The average net non-productive assets of all RRBs has come down from 3.4 percent as of
March 31, 2007 to 2.96 percent on March 31, 2008," said Ramanathan.
The RRBs cater to the rural financial needs, and are sponsored by the public sector
banks like the United Commercial Bank. Other stakeholders are the state and central
banks.
--IANS
