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Banks seek interest on farm debt reimbursement delay

Banks seek interest on farm debt reimbursement delay
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First Published: Wed, Aug 27 2008. 06 40 PM IST
Updated: Wed, Aug 27 2008. 06 40 PM IST
PTI
New Delhi: Public sector banks have asked the government to pay interest for delay in reimbursing the Rs70,000 crore worth farm loans written off by them, even as the administration is expected to pay back about Rs25,000 crore by October-end.
“Banks have suggested that they be compensated on payment of farm debt waiver,” Financial Sector Secretary Arun Ramanathan said after Finance Minister P Chidambaram met the chairpersons of Regional Rural Banks.
RRBs catering to the rural sector sponsored by major public sector banks alongwith Centre and State governments also hold stake in them.
Earlier, the bankers told Chidambaram that they were facing liquidity crunch due to delay in the relief package, and were unable to provide credit to farmers.
Chidambaram said, “Due to delay in Parliament session, supplementary demand of grants could not be passed. The RBI and NABARD have been asked to look into the matter so that banks do not face fund shortage for advancing loans to the farmers,” he said.
They asked the government to compensate banks by providing interest on the loans waived off, as they had to pay interest to their lenders for that period.
The bankers were concerned that though the farms loans have been written-off as on 31 March, they have still to get funds from the government.
Since the Parliament session has been deferred to 17 October, the government would not be able to release funds before October-end.
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First Published: Wed, Aug 27 2008. 06 40 PM IST
More Topics: Banks | Parliament | Farm | Reimbursment | Debt |