Rs.43.11 bn interest for banks on waived off farm loan

New Delhi, Oct 3 (IANS) State-owned banks will receive Rs.4,311 crore (Rs.43.11 billion) as interest on farm loans of Rs.716.8 billion that were waived off earlier this year under a government fiat.

A cabinet meeting chaired by Prime Minister Manmohan Singh Friday sanctioned the amount after the banks argued that the finance ministry's delay in reimbursing the waived-off farm loan was depriving them of interest that would otherwise have accrued on the loans.

The banks had sought the payment of interest from March 1 this year.

The government is also likely to release Rs.25,000 crore (Rs.250 billion) to the banks to help them meet the loss incurred on account of the farm loan waiver.

It had initially announced a total farm loan waiver of Rs.60,000 crore or Rs.600 billion in February, but subsequently increased it to Rs.71,680 crore (Rs.716.8 billion) to cover nearly 43 million small and marginal farmers.