State govt waives Rs 296.52 crore farm loan interest

Interest on medium and long-term loans written off

The State government has waived the interest on medium and long-term loans borrowed by farmers from cooperative banks for the financial year 2015-16 but rejected the demand to waive of loans.

In addition, the government has also allowed farmers to defer for an year the repayment of loan instalments for the said period. An announcement offering assistance to farmers was made at a press conference by Cooperation Minister H S Mahadev Prasad on Wednesday in Bengaluru. The succour comes to farmers at a time when they are facing hardship due to severe drought conditions in 136 taluks. The State has also witnessed a series of suicides by distressed farmers.

Interest amount
The minister said the government has directed cooperative banks not to issue notices to farmers to repay loan installments and interest for the current year. The interest amount of Rs 296.52 crore is being borne by the government.

Over the last few years, about 2.13 lakh farmers have obtained medium and long term loans to the tune of Rs 2,300 crore from cooperative institutions. As many as 21 lakh farmers are paying zero interest to cooperative banks as they have raised loan only within Rs 3 lakh. About 95 per cent of these farmers have repaid the loan. Hence, the question of waiving off interest did not arise. They have become eligible for fresh loans.
Prasad said the cooperative sector has taken a hit due to the Centre’s “discrimination” against Karnataka. Owing to the Centre’s directive, the government was forced to withdraw Rs 3,000 crore deposits from Apex Bank and keep it in government securities. As a result, the government’s lending capacity had taken a beating.

In addition to this, the Nabard had reduced its refinancing amount from 50 to 40 per cent. “This is nothing but slow poisoning. We have appealed to both the Nabard chief and the Centre seeking an intervention, but to no avail.”

Left with no other choice, the State government has decided to move the deposits to the tune of Rs 5,000 crore from various institutions, including Muzrai, APMC, PWD and Marketing, to Apex Bank to facilitate lending.

He said it was ironic that nationalised banks with a total deposit of Rs 5.62 lakh crore had lent agriculture loans of Rs 23,000 crore to 21 lakh farmers. The cooperative institutions, however, had deposits of Rs 22,000 crore, but had lent Rs 9,800 crore agriculture loan.