''Banks, Infact, will be able to lend more money because this money comes to them early. Credit will expand, as each one of these four crore farmers, whose debts are written off, will be able to access Bank credit rather than going to the money lenders,'' Mr Chidambaram said.
The Prime Minister made a brief statement in Parliament yesterday, that the Banks will be compensated for the loans written off by them. The Banking system will not be constrained and adequate liquidity will be provided to the Banks, he added.
Presenting the Budget 2008-09, the Finance Minister announced a whopping Rs 60,000-crore package to provide relief to the indebted farming community by waiving loans of small and marginal farmers.
The scheme also allows the farmers to get fresh loans from the banks.