The Hindu Business Line : Cabinet okays release of interest relief to farmers

The proposal for release of Rs 1,700 crore to provide interest relief of two percentage points in the interest rate on principal amount up to Rs 1,00,000 each on crop loans obtained by the farmers for kharif and rabi of 2005-06, has been approved, the Minister for Information and Broadcasting, Mr Priya Ranjan Dasmunsi, told reporters after a Cabinet meeting. The move would instantly benefit borrowers who have availed themselves of crop loans during 2005-06.

In pursuance of the budget announcement, the RBI has issued a circular to commercial banks stating that the amount of relief is required to be credited to the borrower's account before March 31.

It has been decided that banks may first credit the proposed relief to the farmers' account before March 31, 2006 and thereafter seek reimbursement, stated the circular. Similarly, Nabard had also issued such a circular to the cooperative banks and regional rural banks (RRBs).

According to the proposal, all crop loans for kharif and rabi disbursed to farmers in 2005-06 will be eligible for the interest relief of two percentage points. However, where each crop loan exceeds Rs 1 lakh, the interest relief will be applicable on the principal amount of up to Rs 1 lakh only.

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