Expedite debt waiver: FM

In the course of a discussion with chairmen and managing directors of Mumbai-based public sector banks, the finance minister emphasised that farmers should be able to avail fresh credit from July 2008, a senior banker said.

Chidambaram had previously interacted with the Delhi-based bankers after the government issued detailed guidelines for implementing the scheme. The size of the package was raised from Rs 60,000 crore to over Rs 71,000 crore to provide benefits to more farmers.

Under the waiver and relief package, banks can approach the government for bad loans of small and marginal farmers. Only those direct agricultural loans disbursed between March 31, 1997 and March 31, 2007, overdue on December 31, 2007, and unpaid till the end of February 2008, will enjoy the benefit of the scheme.

Chidambaram today expressed his strong displeasure at the banking sector's poor record in providing credit and financial access to micro and small enterprises.Many sections of society still find it hard to get bank credit.

Bankers are collectively responsible for this situation. In the last few years, channels for credit have been cleared, but banks have not been able to reach out to micro and small enterprises (MSEs), Chidambaram said at a function organised to unveil the code of banks' commitment to MSEs.

They (MSE's) almost entirely depend on unscrupulous moneylenders, who charge very high interest rate for loans. These units are more vulnerable to adverse business conditions, he said.

While large-scale enterprises in sectors like steel get a bailout package to get out of the trying times, hardly anyone expresses concern for MSEs, which are the biggest employer of people with little education and skills, he added.

The finance minister said the code, which sets minimum standards for banks to follow while dealing with MSEs, would improve transparency in interest rates and result in speedy processing and disbursement of loans.