In a significant move to provide relief to farmers, the state government of Karnataka has commenced the process of waiving interest on farm loans disbursed by cooperative societies and banks. The initiative targets farmers who have successfully repaid the entire principal amount of their loans.
As outlined in the circular issued by the Co-operative department, the government has decided to write off interest on all farm loans, even for those farmers who have faced challenges in repaying this fiscal year. The circular specifies that the interest accrued on farm loans up to Rs 10 lakh, with an interest rate of 12%, will be completely waived.
The decision to waive interest on farm loans, particularly for those who have repaid the principal amount, aligns with Chief Minister Siddaramaiah’s announcement made during the winter session of the state legislature in Belagavi last month. The move aims to ease the financial burden on farmers who have fulfilled their repayment obligations.
According to the circular, a total of 56,879 farmers have faced challenges in repaying their medium-term and long-term agricultural loans obtained from cooperative financial institutions. These farmers collectively defaulted on loans amounting to Rs 586.11 crore. The accrued interest on these defaulted loans stands at Rs 440.70 crore as of the financial quarter ending December 31, 2023.
The circular emphasizes that the farmers defaulted on their payments primarily due to severe drought conditions, resulting in difficulties for them to secure fresh loans for their farming activities. This interest waiver is expected to provide much-needed relief to farmers facing financial hardships.
