Govt.'s interest waiver termed discriminatory

Staff Correspondent

BELGAUM: The State Government's interest waiver scheme for farm loans is "discriminatory" and has made the bank apprehensive about the prospects on loan recovery in the coming days, said Ramesh V. Katti, chairman, Belgaum District Central Co-operative Bank.

Speaking to presspersons here on Saturday, he urged the Government to withdraw its order dated 27 April, 2005 pertaining to interest waiver scheme and implement the promises made by the Deputy Chief Minister, Siddaramaiah, in his Budget for 2005-06.

Outstanding loans

He said that Mr. Siddaramaiah, in his budget speech, had announced to waive off simple and panel interest on all outstanding farm loans till May 31, 2004 and had even earmarked Rs. 450 crores in this regard.

Apparently, the decision to waive interest was taken in the wake of four years of consecutive droughts experienced in the State. Subsequently, the Minister for Cooperation, R.V. Deshpande, had announced that interest will be waived on farm loans availed till May 31, 2004 if the principal loan amount was repaid before June 30, 2005.

The Government then came out with a different order (dated April 27, 2005) stating that both simple and panel interest will be waived only for those who repay their principal loan dues between April 1 to June 30, he said.


Ironically, this order is "discriminatory" since all those who have cleared their principal loan amount along with the interest before April 2005 remain deprived of the interest waiver scheme.

At least 40 per cent of the farmers had repaid the loan dues along with interest on the basis of the promise made in the budget speech. But, the latest order has come as shock, Mr. Katti said.

The new order is like a blessing in disguise to will-full defaulters, but why should the prompt and honest farmers be punished, he asked..

He feared that the government has thought about the implications of its decision on the financial stability of the cooperative banks in the State.

In Belgaum district, 47,779 farmers had cleared loans to the tune of Rs. 73.35 crores with both simple and panel interest of Rs. 29.06 crores before April this year.

Similarly, many farmers had cleared their dues in other districts before April.


Now, if the government refused to pay the interest amount, it will only be encouraging prospective defaulters. He was apprehensive that the farmers availing fresh loans during 2005-06 from cooperative banks may not repay their dues at all in near future.

In that case, almost all the co-operative banks in the state will land into financial difficulties.

He urged the Government to immediately withdraw the April 27 order and implement the promises made in the budget speech.

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