Govt to write off NPA crop loans up to Rs 2 lakh

Under pressure from farmers, the state government decided Friday to waive their crop loans in commercial banks that had turned into non-performing assets (NPA) worth Rs 965 crore.

The move will cover 1.09 lakh farmers whose crop loans had turned into NPAs because of prolonged inactivity in repayment.

The decision was announced after Chief Minister H D Kumaraswamy held talks with representatives of 14 banks here. Banks have agreed to sacrifice 25% of the NPA loan amount, whereas the remaining 75% will be paid by the government.

“The Finance department has issued orders waiving NPA loans,” Chief Secretary T M Vijay Bhaskar told reporters. “With this, four types of crop loans - regular, overdue, restructured and NPA - will be covered under the loan waiver. The waiver amount will be put in the farmers’ accounts by the end of June,” he said.

“The government will waive up to Rs 2 lakh of the NPA loans. If the NPA loan amount exceeds Rs 2 lakh, farmers will have to repay the difference,” Additional Chief Secretary (finance) ISN Prasad said.

Earlier this week, the government issued orders that crop loans farmers have borrowed from commercial banks would be waived in one go instead of the original plan of doing so over four phases. This includes restructured loans (Rs 2,812 crore), overdue loans (Rs 3,057 crore) and incentive for regular loans (Rs 720 crore) in commercial banks.

So far, the government has paid Rs 5,297 crore for 7.49 lakh crop loans in commercial banks, the chief secretary said. “Out of 12 lakh farmers, we’ve covered about 8.5 lakh farmers who were eligible. Another 1.61 lakh farmers remain (uncovered) due to non-submission of details,” Bhaskar said.

The crop loan waiver scheme, which is Kumaraswamy’s pet project, involves crediting Rs 25,000 into the accounts of farmers who have a regular loan and crediting up to Rs 2 lakh in all other loan accounts.

The quantum of the crop loan waiver has reduced from Rs 46,753 crore to about Rs 16,000 crore - commercial and cooperative banks put together - due to various eligibility conditions drawn up by the government.

Kumaraswamy asked banks to clear confusion in 13,123 loan accounts to which Rs 59 crore had been credited and then reversed due to errors in categorising them.

“The CM has also asked banks to start issuing fresh loans to farmers whose loans have been waived, keeping in mind sowing during monsoon,” Bhaskar said.