Karnataka: Relief for farmers, loan interest waived

Bengaluru: The state government has decided to waive the interest of medium and long term farm loans for the current financial year. Even the installment for this year would be deferred to next year and this would cost the government around Rs 296.52 crore.

Speaking to reporters here on Wednesday, cooperatives minister Mr Mahadev Prasad said that due to drought in the state, the government has tried to help farmers. As high as 96% of those who have availed interest free Rs 3 lakh loans from cooperative institutions have already paid it back. Those who availed medium and long-term loan are facing hardship. So, the interest for this financial year would be waived and farmers can pay this year's installment by next year, he said.

Mr Prasad also said that the Union government cutting down refinance for farm loans by the cooperative sector and directing Apex banks to deposit Statutory Liquidity Ratio money in National Security Schemes has affected cooperative institutions especially during a drought. Even the IT initiative to deduct 10% TDS from deposits earning over Rs 10,000 interest annually has made cooperative deposits less attractive.

Till last year, the Union government used to refinance 50% of farm loans through NABARD and the cooperative sector used to lend interest free short term loans to farmers. However, the Centre has decided to cut the refinance from 50% to 40%. This curtailed the lending power of cooperative institutions by Rs 1500 crore. Besides, a direction to the Apex bank for depositing SLR with National Security Schemes has blocked another Rs 3000 crore for the cooperative sector, Mr Mahadeva Prasad said.