India proposes to waive $15 bln of farm loans

NEW DELHI Fri Feb 29, 2008 2:59pm IST

A woman works in a paddy field at Mathurakhand village in Sunderbans, about 125 km southeast of Kolkata February 10, 2008. India proposes to waive 600 billion rupees of bank loans to farmers, the finance minister said on Friday in his annual budget for the fiscal year that begins in April. REUTERS/Parth Sanyal

A woman works in a paddy field at Mathurakhand village in Sunderbans, about 125 km southeast of Kolkata February 10, 2008. India proposes to waive 600 billion rupees of bank loans to farmers, the finance minister said on Friday in his annual budget for the fiscal year that begins in April.

Credit: Reuters/Parth Sanyal

Related Topics

NEW DELHI (Reuters) - India proposes to waive 600 billion rupees of bank loans to farmers, the finance minister said on Friday in his annual budget for the fiscal year that begins in April.

Palaniappan Chidambaram said the write-off would be completed by June 30, with 500 billion rupees going toward farmers holding up to two hectares of land.

For bigger farmers, the budget proposed a waiver of 100 billion rupees as one-time settlement, provided the farmers repaid 75 percent of their loan that was overdue on Dec. 31, 2007.

"All agricultural loans disbursed by scheduled commercial banks... up to March 31, 2007 and overdue as on Dec. 31, 2007, will be covered in the scheme," he said.

Shares in Indian banks initially fell sharply on the announcement, but later trimmed losses as there was uncertainty about how much the government would compensate the banks.

"The waiver of small farm loans is not a negative thing entirely as these were the most stubborn NPAs, on banks' loan books," said Rupa Rege Nitsure, chief economist, Bank of Baroda, referring to non-performing assets.

"There is comfort that the government will partially bear the burden for banks."

Chidambaram said the farmers covered under the scheme would be eligible for fresh loans after the waiver.

Loans rescheduled earlier will also be eligible for relief under the new scheme, Chidambaram said.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 

REUTERS SHOWCASE

Wilful Negligence?

Wilful Negligence?

SEBI piles pressure on Sahara to sell overseas hotels  Full Article 

Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage