New Delhi: July 16, 2007 - Union Finance Minister P Chidambaram today announced 18.5-billion-rupee rescue package for ailing Regional Rural Banks (RRBs) that will write off the banks' losses by March 2010.

The Centre will provide 50 percent funds for the rural banks, while the States would contribute 15 percent and the remainder amount will come from promoter banks, Chidambaram said.

"The 29 RRBs, which does not have the positive networking today, will become positive in the network by March 31, 2010. All the districts would be covered except for a few Union Territories which already have large commercial banks network," he told reporters.

There are 96 such banks in the country and 39 of them have accumulated losses of 27.46 billion rupees by the end of March this year, after they failed to recover loans given to farmers.

The promise of fresh cash follows a much larger government pledge to bail out loss-making co-operative banks and help them lend to poor farmers at cheaper rates.

The World Bank is lending New Delhi 600 million dollars for that programme.

Chidambaram today said the RRBs would come out with value-added services to reach out to a larger section of the populace, which would include mutual funds, home loans, home improvement loans, resale loans to traders, insurance products, health insurance products, demand drafts and setting up ATMs for the RRBs.

He also said that the rural banks have been directed to help poor farmers swap loans taken from moneylenders. (ANI)