The government on Thursday said it will implement the Rs 60,000-crore (Rs 600 billion) farm debt waiver scheme, announced in the Budget 2008-09, in a manner that will strengthen the banking system.

The debt waiver and debt-relief scheme would be implemented in a manner that, "the banking system is strengthened rather than weakened", Finance Minister P Chidambaram told reporters after the post-Budget meeting with the RBI Board in New Delhi.

"I explained debt waiver and debt-relief scheme to the board members and since it was a closed-door meeting I took them through the contours of the package," he said.

RBI Governor Y V Reddy told the board members that the central bank is fully geared to support and help the government in implementing the debt-waiver and debt-relief package, Chidambaram said.

As explained by the Prime Minister Manmohan Singh on Wednesday, banking system would be compensated for loan write-off in a way that the scheme would not be a constraint at all, said the Finance Minister.

He added that government, RBI and banks would work in a manner that the goals and objectives of the scheme are achieved.

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