Govt withdraws fiat on loan recovery

Under fire, the BJP government on Wednesday withheld a directive that allowed the Karnataka State Cooperative Agricultural and Rural Development (KSCARD) Bank to recover loans from farmers in drought-hit areas.

The government had revoked a 2016 directive that did not allow banks to recover bad loans, which was withdrawn by Cooperation Minister Basavaraj Bommai on Wednesday. This came after the state government came under attack from Congress, which accused the B S Yediyurappa government of “betraying farmers”.

“Our government had notified the banks not to forcibly recover loans from farmers in drought-hit areas. This was revoked by B S Yediyurappa government by allowing banks to recover the bad loans. By this, the BJP has betrayed our farmers,” Siddaramaiah had said in a tweet, where he posted a copy of the letter by cooperation department to go ahead with recovery of loans.

In 2016, the then chief minister Siddaramaiah had directed that cooperative loans to farmers should not be recovered due to drought that year. Subsequently, the KSCARD did not recover loans citing the 2016 directive, to which the Finance department had not concurred. It seems that the directive was confined to preventing recovery of loans in 2016 only.