6,000 coffee growers in Karnataka stand to lose plantations over unpaid loans

Bengaluru: Around 6,000 coffee growers across the growing regions in Kodagu, Chikkamagaluru and Hassan are facing the threat of losing their plantations as the deadline to repay loans ended on Monday (June 30). These growers collectively owe in excess of Rs 500 crore to various banks in the state.

Banks are gearing up to recover their dues by auctioning the plantations under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. Different banks have already issued auction of property notices to coffee growers in Chikkamagaluru and Kodagu districts.

While the coffee crop loan does not come the SARFAESI Act, loans taken for the development of plantations attract penal action, according to a Coffee Board official.

Thousands of coffee growers in Karnataka who have taken loans for various development activities over the past many decades, have defaulted to banks and the total amount left unpaid has now swollen to more than Rs 500 crore, said M J Dinesh, Chairman, Coffee Board of India.

"In November last year, we met Finance Minister Nirmala Sitharaman and requested a package to bail out coffee growers. She agreed to our demands and in consultation with the Finance Secretary, a one-time settlement (OTS) scheme was prepared.

Under the OTS scheme, coffee growers were given time till June 30 to repay their loans. All those growers who paid at least 5% of their outstanding loan amount before March 31, 2025 have been exempted from any penal action under the SARFAESI Act," Dinesh told DH.

Under the package worked out by the Finance Ministry, coffee growers were given eight months to repay their loans and a simple 3% interest rate was levied for loans under Rs 25 lakh and 4% interest for loans above Rs 25 lakh and up to Rs 50 lakh.  

So far, only 518 growers have availed the OTS scheme in the state.

Dinesh said banks have started issuing notices to farmers who have not opted for the OTS before March 31. They will start the recovery of loans from July 1.

"Coffee growers have been facing several challenges such as low yield, high cost of operation. The labour and input costs have gone up steeply over the years. It will be very difficult for small growers to repay in one or two instalments. We urge the banks and the government to extend the deadline for repayment," Arvind Rao, a grower from Chikkamagaluru and Chairman of Karnataka Planters Association said.

Dinesh said he will meet finance ministry officials in Delhi this week to seek a further extension of the deadline.