The government needs Parliament approval for the payout, and the monsoon session is likely to be convened only in August first week, according to a senior finance ministry official.
"The instalment, which will be part of the supplementary demand for grants, will be tabled in monsoon session of Parliament for its nod," the official said.
The government concluded its ambitious Rs 71,680 crore farm loan wavier scheme on June 30. Under the plan, the government has completely waived off all loans of marginal and small farmers that were overdue on December 31 and remained unpaid till February 29.
The scheme, which benefited 40 million farmers, covered all farm loans disbursed by commercial banks, regional rural banks, and cooperative banks.
In respect of other farmers, there was a one-time settlement scheme for all loans that were overdue on December 31. Under this scheme, a rebate of 25 per cent has been given against payment of balance 75 per cent.
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Replying to the debate on 2008-09 Budget in Lok Sabha earlier this year, Finance Minister P Chidambaram had said the first instalment of Rs 25,000 crore will be paid to banks as cash as soon as the first supplementary was approved by the Parliament.
As per the original plan, banks were to waive off loans aggregating Rs 60,000 crore. Apart from Rs 25,000 crore this year, the government planned to pay banks Rs 15,000 crore in 2009-10, Rs 12,000 crore in 2010-11 and Rs 8,000 crore in 2011-12.