New Delhi, Jan 24 (IANS): The Union Cabinet on Tuesday approved interest waiver for November and December 2016, for farmers who have taken short term crop loans from cooperative banks for the Rabi sowing season.

Due to the cancellation of legal tender of old Rs 500 and Rs 1,000 notes the farmers were constrained due to inadequacy of cash in carrying out Rabi operations and paying the interest of the short term crop loans. 

"The Union Cabinet chaired by Prime Minister Narendra Modi has given its ex-post facto approval for interest waiver for the two months of November and December, 2016 for farmers accessing short term crop loans from cooperative banks," an official statement said. 

The decision intends to ensure availability of resources with cooperative banks to help farmers in easily accessing crop loans to overcome the difficulties in view of the reduction in availability of cash for carrying out Rabi operations, the statement said.

"Additional resources are to be provided to cooperative banks through National Bank For Agriculture and Rural Development (Nabard) for refinance to the cooperative banks on account of interest waiver of two months for November and December, 2016," it said. 

This will be extended by cooperative banks to the farmers in the current financial year 2016-17. 

"An additional financial liability of Rs 1,060.50 crore will be required for this purpose. A sum of Rs 15,000 crore allocated during 2016-17 to implement the interest subsidy scheme has already been utilised," it said.