Nationalised banks agree to govt. proposal on repayment

Loan waiver: State to repay loans in 4 instalments

₹6,500 crore, which has been set aside in this budget, will go towards the first payment for the financial year 2018-2019.

Over 23 lakh farming families having taken loans from nationalised banks are set to benefit from the State government’s loan waiver scheme, as Chief Minister H.D. Kumaraswamy on Friday announced that banks had agreed to the government’s proposal of repaying the loans and interest in four instalments, starting this financial year.

The banks, he said, had agreed to issue loan-free certificates to farmers and offer them fresh loans. “The banks will have nothing to do with farmers over this loan. It is now the government’s responsibility,” he said.

The total outgo to meet the loan waiver scheme in nationalised banks will be ₹30,133 crore, including ₹7,419 crore as interest calculated at the rate of 12%. This is apart from ₹9,448 crore released towards loan waiver in the cooperative sector.

While 16.94 lakh accounts — declared as non performing assets (NPAs) or loan defaulter with overdue or restructured loans — will benefit, with loan waiver capped at ₹2 lakh, 6.25 lakh accounts will receive ₹25,000 each as incentive. “The Government Order to this effect will be issued today (Friday),” the CM told presspersons after chairing a marathon three-and-a-half hour Cabinet meet.

Mode of payment

Explaining the mode of repayment, Mr. Kumaraswamy said that ₹6,500 crore, which has been set aside in the budget, will go towards the first payment for the fiscal year 2018-19. This will be followed by ₹8,656 crore in 2019-20, ₹7,846 crore in 2020-21 and ₹7,131 crore in 2021-22.

“This amount still could come down as we are asking banks to waive the interest component. The total amount of crop loan component that has turned NPA or rescheduled is ₹22,000 crore,” he added. To identify beneficiaries, two IAS officers would be posted as nodal officers, he said.

He claimed that there have been efforts to derail his government’s loan waiver scheme. “Some banks that had agreed to the government’s proposal went back on their word and backed out in the middle. There have been efforts to embarrass the JD(S)-Congress coalition government. I congratulate them for their efforts,” he said.

“Those who had questioned how the nationalised banks would agree to the proposal were behind it,” he said without naming anyone. This was a veiled reference to Leader of the Opposition B.S. Yeddyurappa, who had earlier questioned the government’s move.