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Kamal Narang

The Finance Minister, Mr P. Chidambaram, with the Secretary (Financial Sector), Mr Arun Ramanathan, during a meeting of the chairpersons of regional rural banks in the Capital on Wednesday. —

Our Bureau

New Delhi, Aug. 27 Public sector banks (PSBs), cooperative banks and regional rural banks (RRBs) are likely to get their first round of reimbursement for the farm debt waiver scheme only after the first supplementary demand for grants for 2008-09 are passed by Parliament, a top Finance Ministry official said here today.

The monsoon session is to be held in October when the first supplementary demand for grants is expected to be taken up.

Indications are that the entire Rs 25,000 crore, the amount of reimbursement planned for 2008-09, would be released after the first supplementary demand for grants.

Already, the Centre had provided Rs 10,000 crore, under the cash component, in the third supplementary of 2007-08. Now, the Government may in the first supplementary for 2008-09 provide for about Rs 15,000 crore to ensure the disbursal of Rs 25,000 crore to lending institutions during 2008-09.

“This year (2008-09) the intention is to release Rs 25,000 crore. We will be able to do that only after the first supplementary is passed. After the first supplementary, we will be able to draw the amount and disburse it”, Mr Arun Ramanathan, Secretary (Financial Sector), told reporters here today.

According to the schedule indicated by the Finance Minister, Mr P. Chidambaram in March this year, Rs 25,000 crore would go to lending institutions in 2008-09, Rs 15,000 crore in 2009-10, Rs 12,000 crore next year and Rs 8,000 crore in 2011-12.

Meanwhile, Mr Ramanathan confirmed that banks had suggested that they should also be paid interest from March 1 on the amounts due from the Government.

“The suggestion has been made that interest also should be given. We have not taken any decision on it. The matter has to be examined”, he said.

Data available with the Finance Ministry show that PSBs had written off about Rs 25,357.56 crore towards farm debt waiver and Rs 5,314.54 crore towards debt relief scheme. Under the scheme, cooperative banks and RRBs had written off Rs 28,802.91 crore towards farm debt waiver and Rs 6,565.41 crore towards debt relief scheme.

On regional rural banks (RRBs), whose performance was reviewed by the Finance Minister here today, Mr Ramanathan said that the performance of RRBs with few exceptions was quite satisfactory.

“Only 9 of the 88 RRBs are making current losses and we expect even those nine to record current profits by the end of this year”, he said. On consolidation of RRBs, he said that the Centre has asked States’ concurrence and that he expected 12 RRBs to become 5 by December 2008, which means the total number would come down to 81.

More Stories on : Farm credit | Regional Rural Banks

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