Cabinet approves 60-day interest waiver on farm loans from cooperative banks

New Delhi: The Cabinet on Tuesday gave its ex-post facto approval to interest waive-off to farmers for November and December.

The interest waive-off is aeemigly aimed at offering relief to farmers hit by cash crunch triggered by demonetisation of Rs 1,000 and Rs 500 notes in November. The total value of interest waive-off amounted to Rs 660.50 crore interest on short-term crop loans from cooperative banks.

"Farmers in the whole of India availing short term crop loans from Cooperative Banks will be benefited", said a government's statement after the Cabinet meeting which was chaired by the Prime Minister Narendra Modi.

“The decision intends to ensure availability of resources with Cooperative Banks help farmers in easily accessing crop loans from Cooperative Banks to overcome the difficulties in view of the reduction in availability of cash for carrying out Rabi operations”added the statement.

The decision also provides for interest subvention to National Bank for Agricultural and Rural Development (NABARD) on additional refinance by NABARD to Cooperative Banks.

Additional resources are to be provided to Cooperative Banks through NABARD for refinance to the Cooperative Banks on account of interest waiver of two months for November and December, 2016.

This will be extended by Cooperative Banks to the farmers in the current financial year 2016-17. An additional financial liability of Rs 1060.50 crore will be required for this purpose. A sum of Rs 15, 000 crore allocated during 2016-17 to implement the Interest Subvention Scheme (ISS) has already been utilised, said the government statement.