The Union Cabinet today gave its approval to continue interest subsidy to Public Sector Banks (PSBs), Regional Rural Banks (RRBs), Cooperatives Banks and NABARD to enable them to provide short-term crop loans up to Rs 3 lakh to farmers at 7% p.a. during the year 2012-13. It also decided to provide additional interest subsidy of 3% p.a. to those farmers who repay loans within one year of disbursement in the current fiscal year.

The Cabinet allowed the release of 10,901 crore Rupees as interest subvention for 2012-13 . Interest subsidy has also been allowed for small and marginal farmers having Kisan Credit Cards for loan against negotiableखरीद फरोख्त के लायक warehouse receipts for post harvest at 7% p.a. The Cabinet approved the release of 442 crore rupees as interest subsidy to small and marginal farmers having Kisan Credit Cards against negotiable warehouse receipts, for post-harvest.

AIR correspondent reports, centre has been subsidizing short-term crop loans to farmers since 2006-07 to ensure the availability of crop loans to farmers upto Rs.3 lakh at 7% p.a. Banks have been consistently meeting the target set for agriculture credit flow in the past years. For the year 2012-13, the target for agricultural credit flow has been raised to 5,75,000 crore Rs from 4,75,000 crore Rs in the year 2011-12.

The head of the International Monetary Fund is in Egypt to discuss an urgently-needed financial aid package for the country's struggling economy. Christine Lagarde will meet President Mohammed Mursi and his new cabinet. The Egyptian Finance Minister Mumtaz al-Said has said Cairo will be looking for a loan of 4.8 billion dollar, up from the 3.2 billion dollar that has been mooted since last year. It is needed to cover budget deficits resulting from shrinking tourism and foreign investment revenues. Egypt's foreign reserves have fallen to well under half the levels seen before last year's popular uprising against former President Hosni Mubarak, when the central bank started to sell dollars to prop up(सहायता देना)the Egyptian pound. The government is facing a balance of payments crisis and high borrowing costs.

The government is to distribute five lakh seventy-five thousand crore rupees by way of agricultural loans in the current fiscal. The last fiscal's target was four lakh seventy-five thousand crore rupees which crossed the mark of five lakh eleven thousand twenty-nine crore rupees by March, this year. Minister of State for Finance Namo Narain

The Karnataka Government has announced waiver of crop loans up to Rs 25,000 for farmers hit by drought. Chief Minister Jagadish Shetter made this announcement in the Legislative Assembly.

This will burden the exchequer by Rs 3,500 crore, benefiting around 16 lakh farmers in the state.

Reacting to the announcement in the Assembly today, Deputy leader of the Opposition Jayachandra asked the Government to fix the cut off date of loan as April 1,2011 instead of August 1 of last year.

Reserve Bank Of India has asked banks to immediately stop charging penalty on pre-payment of home loans taken on floating interest rates.

In a notification issued from Mumbai on Tuesday, RBI has said that removal of foreclosure charges or prepayment penalty on home loans will lead to reduction in the discrimination between existing and new borrowers.

The action will also result in finer pricing of the floating rate home loans. Recently, the Committee on Customer Service in Banks chaired by M. Damodaran had observed that foreclosure charges levied by banks on prepayment of home loans were resented by home loan borrowers.

As such, foreclosure charges are seen as a restrictive practice deterring the borrowers from switching over to cheaper available source.

The committee had also said that the banks were found to be hesitant in passing on the benefits of lower interest rates to the existing borrowers in a falling interest rate scenario.

The Government has expressed it's commitment to support development of the North Eastern states and said it would help the states in raising loans from market.
Addressing a meeting of the Chief Ministers of North Eastern states in New Delhi yesterday the Finance Minister Pranab Mukherjee said if any State faced a problem on account of an undersubscribed market loan, the Centre would be ready to raise the loan within the permitted borrowing ceiling, and pass it on to the concerned state .

Mr Mukherjee also promised that the Finance Ministry would soon issue notifications to provide tax relief to industry in the region.

He further said that the Centre is aware of the special issues of the region, including a low base to mobilise resources and a geographical terrain that created challenges for communication and infrastructure development.

The Finance Minister appreciated the better fiscal management by most of the North Eastern States, as a result of which most States did not have to resort to overdrafts.( An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero.  If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft limit, then interest is normally charged at the agreed rate. If the negative balance exceeds the agreed terms, then additional fees may be charged and higher interest rates may apply.)

He also said that States Specific Grants recommended by the 13th Finance Commission would be released to ensure that the purposes of the grants were fulfilled without interruption.

The Centre has agreed for a 35000 crore rupee debt restructuring package for the textile sector. Following his meeting with Finance Minister Pranab Mukherjee last evening, the Textiles Minister Anand Sharma announced that the Government has agreed that there is a need to support the Textiles industry in this time of crisis. The Textiles Minister said that the total outstanding debt of textiles sector is Rs. 155,809 crores of which debt of Rs. 35000 crores needs restructuring. He said, Government directions to banks to consider this on priority would be issued in this regard. Textiles Minister Anand Sharma said that there was agreement with the Ministry of Finance that the debt restructuring package would be considered on a case to case basis by Individual Banks.  The Finance ministry would examine in consultation with Reserve Bank of India for a 2 year moratorium on term loans, special provision in NPA norms to avoid asset reclassification and working capital eroded to be converted into working capital term loans repayable over a period of 3-5 years.  An inter-ministerial committee of senior officials would also be constituted to coordinate with Industry-Banks in expeditious restructuring.  The Union Minister of Commerce, Industry and Textiles Shri Anand Sharma had met Finance Minister Shri Pranab Mukherjee, and urged for loan restructuring for the debt stressed textiles industry. Textiles Industry Associations had represented to the textile minister of high stress levels and industry sickness and sought his intervention for a restructuring package. Industry associations had sought a 2 year moratorium on long term loans, special dispensation to be provided by Reserve Bank of India in its NPA rules working capital term loans.