The government is likely to release Rs 10,000 crore to banks and financial institutions as part of compensation for writing off loans under the farm-debt waiver scheme.
"The Finance Ministry is considering to release Rs 10,000 crore to lending institutions in a month or so," official sources said. This would be over and above Rs 5,000 crore which was given earlier this fiscal to the banks and financial institutions towrads the debt waiver scheme.
The government had announced that it would pay Rs 15,000 crore to the lenders during the current fiscal. The debt waiver scheme, announced by the government in 2008-09 Budget, was implemented by June 30, 2008, entailed a burden of Rs 71,000 crore on banks and financial institutions which the government promised to reimburse in stages.
During 2008-09, the government gave a total of Rs 25,000 crore to lending institutions as compensation towards the the Agricultural Debt Waiver and Debt Relief Scheme. Under the debt waiver and relief package, for small and marginal farmers (with holdings up to 2 hectare) there was a complete waiver of all loans due on December 31, 2007, and which remained unpaid until February 29, 2008.