KOLKATA: Even as the country goes gaga over the massive Rs 60,000-crore farm loan-waiver scheme, the government is yet to release funds towards interest subsidy on short-term crop loans. This has put lending banks in a spot, especially weaker entities such as regional rural banks (RRBs) and agriculture credit co-operative societies.
The government gives an interest subsidy of 2% to banks for providing short-term crop loans to farmers at 7%. Under the scheme, farmers are entitled to get soft loans with an upper limit of Rs 3 lakh. The scheme has been in vogue since April 2006. Since then, the government has released funds only once, covering claims for the April-December 2006 period, albeit after half-an-year of the claims being submitted to the government.
The subsidy claims for January-to-September 2007 is yet to be released. Confirming this, senior bank officials said: “The government takes at least three to four months to settle claims.” This comes as a jolt to RRBs and co-operative banks, which are hamstrung with lack of resources. Mainstream commercial banks, on the other hand, are normally in a position to withstand the loss due to the delay in claim settlement.
According to a source, RRBs, co-operative banks and National Bank for Agriculture & Rural Development (Nabard) are supposed to get Rs 756 crore cumulatively from the government as interest subsidy under the 7% crop-loan scheme for the January-July 2007 period.
In a letter issued on April 2, Nabard has informed a co-operative bank: “The pending claim for the January-July 2007 period under the interest subvention scheme 2006-07 will be settled after receipt of funds from the government.”
Meanwhile, a senior Nabard official clarified to ET: “The government has technically released the fund for the period under review. It is lying with RBI for clearance. The government releases the fund to commercial banks through RBI and to RRBs and agriculture co-operative credit agencies through Nabard.
When contacted, West Bengal State Co-operative Bank chairman Samir Ghosh said: “Since the government does not pay any interest on the claimed amount of interest subvention for this delayed period, the short-term credit co-operative structure suffers significant losses.”
The government gives an interest subsidy of 2% to banks for providing short-term crop loans to farmers at 7%. Under the scheme, farmers are entitled to get soft loans with an upper limit of Rs 3 lakh. The scheme has been in vogue since April 2006. Since then, the government has released funds only once, covering claims for the April-December 2006 period, albeit after half-an-year of the claims being submitted to the government.
The subsidy claims for January-to-September 2007 is yet to be released. Confirming this, senior bank officials said: “The government takes at least three to four months to settle claims.” This comes as a jolt to RRBs and co-operative banks, which are hamstrung with lack of resources. Mainstream commercial banks, on the other hand, are normally in a position to withstand the loss due to the delay in claim settlement.
According to a source, RRBs, co-operative banks and National Bank for Agriculture & Rural Development (Nabard) are supposed to get Rs 756 crore cumulatively from the government as interest subsidy under the 7% crop-loan scheme for the January-July 2007 period.
In a letter issued on April 2, Nabard has informed a co-operative bank: “The pending claim for the January-July 2007 period under the interest subvention scheme 2006-07 will be settled after receipt of funds from the government.”
Meanwhile, a senior Nabard official clarified to ET: “The government has technically released the fund for the period under review. It is lying with RBI for clearance. The government releases the fund to commercial banks through RBI and to RRBs and agriculture co-operative credit agencies through Nabard.
When contacted, West Bengal State Co-operative Bank chairman Samir Ghosh said: “Since the government does not pay any interest on the claimed amount of interest subvention for this delayed period, the short-term credit co-operative structure suffers significant losses.”
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