NEW YORK (AP) _ A plan to lower interest rates for Mexican borrowers having trouble paying back loans will put extra pressure on Mexico's banks, already severely weakened by record levels of bad credits.

The plan to cut rates on loans for consumers, business owners and farmers will squeeze bank profits in one area that has underpinned many financial institutions catering to the public _ income earned from sky-high interest rates.

Loan rates have soared as a result of the economic crisis that followed the peso devaluation last December. Many borrowers have not been able to meet their payments. More than 95 billion pesos worth of loans, which at current exchange rates total $14.9 billion, are not being paid back. They represent 16.5 percent of all loans at Mexico's largest banks.

The government has already taken over several small banks and may have to seize more.

But by keeping deposit rates low and collecting on as many loans as they can, some large banks have sustained themselves on net interest income _ what banks pay for deposits vs. what they earn on loans.

The debtors assistance program will put a cap on the interest rates banks charge customers on existing loans. For instance, credit card debts that now carry a 60 percent interest rate will be payable at only a 38.5 percent rate for the first 5,000 pesos, or $806, of debt. The program will last until September 1996 for most consumers and until February 1997 for farmers.

Over the long term, the plan should help banks by staving off more loan defaults and putting more delinquent debtors back on paying status.

But it further clouds the outlook for Mexican banks in the next few months, analysts say.

``In the short term it's a negative for larger banks,'' said Karen Miller, an analyst at Latinvest Securities Inc., a New York brokerage specializing in Latin America investments. ``This was a way of balancing the interests of the banks with social concerns.''

The government is sharing in the banks' pain, providing subsidies to make up for the lost interest payments. But analysts said it's not clear how much of the burden banks will have to shoulder and how much the government will take on.

Cynthia Harlow, who follows Mexican banks for CS First Boston, said most banks can't afford to lose much of what is a primary source of earnings.

``Outside of Bancomer and Banamex, the two largest banks, most can't afford much in the way of forgiveness,'' said Harlow. ``The repayment by the government would have to be substantial.''

The plan's estimated $1.5 billion cost will be divided between the federal government and the banks holding the loans.

Banamex and Bancomer will suffer the least from lost interest because they can gather low-cost deposits through large branch networks, said Harlow. Smaller banks will have a rougher time.

Other programs designed to assist Mexican debtors have had little impact. The government and banks in March offered to restructure debt payments at rates indexed to inflation, called unidades de inversion, or UDIs. The rates in effect lower interest payments for a time.

The government earmarked $12.4 billion for the program, but few consumers and businesses have stepped up to the plate because banks have done a poor job explaining the complicated program and borrowers don't believe it will work.

``We want to solve the problems, not postpone them,'' said Georgina Garcia, a 42-year-old architect and founder of GBH Constructora, a construction company that is in danger of collapsing under the weight of unpaid bills and loans.