Tag Archive Farm Loan Waiver

2020: Telangana Loan waiver

2020 Telangana loan waiver AGLC_RT148 Download the GO
The Telangana Government has notified guidelines for the implementation of farm loan waiver for all loans between outstanding April 1, 2014, and December 11, 2018, with a cap of 1 lakh for each farmer.
Commercial banks have been asked to prepare a list of beneficiaries with the help of local government employees. The total outgo, estimated at 16,000 crore, will be disbursed in four installments. State government had recently allotted Rs 1,198 crore in its 2020-21 budget for the scheme
However, all loans below 25,000 will be cleared at one go. This will benefit 5.83 lakh farmers.
All crop loans sanctioned or renewed on or after April 1, 2014 and outstanding as on December 11, 2018, are eligible for the waiver.
However, gold loans availed from urban and metropolitan banks or bank branches as crop loans will not be eligible for waiver. Loans availed from the these banks, which also service some rural areas, are eligible for loan waiver.
It will cover short-term production loans and crop loans against gold. Each family will be eligible for a waiver of 1 lakh only, including principal and interest. The amount, however, will not include processing charges, legal charges, insurance premium or inspection charges.
While the loans above Rs 25,000 and upto Rs 1 lakh per farmer’s family requires about Rs 24,738 crore, the State government had earmarked Rs 6,225 crore in the budget under the scheme towards first installment.

Loan Waivers and Bank Credit: Reflections on the Evidence and the Way Forward

Sudha Narayanan and Nirupam Mehrotra
2019 Loan Waivers and Bank Credit
In the past decade, farm loan waivers have become a policy instrument to alleviate the financial distress of farmers. Despite agreement on the theoretical rationale for such debt forgiveness and its deep contextual relevance, many fear that in the long run, loan waivers might vitiate the repayment culture in the farm sector and undermine the financial status of banks. At present, critiques of large-scale loan waivers rest on limited evidence. This article reviews and synthesizes existing research and available data on the implications of loan waivers, especially for the flow of credit to farmers from banks. On most of the issues, such as farmer well-being and repayment culture, there seems to be mixed evidence on the consequences of debt waivers. Credible evidence on macroeconomic implications is limited, mainly on account of methodological challenges. This article concludes that even if loan waivers are an inappropriate strategy to support farm incomes in sustainable ways, the wide-ranging negative impacts on the formal banking sector are perhaps overstated. A more fruitful approach would be to focus on whether loan waivers can be designed to reduce the possible negative consequences for the formal banking system as well as for macroeconomic system. The article identifies three possible instruments—loan insurance products that will help banks cope with the consequences of large-scale defaults. Second, to explore the creation of a distress fund that will cushion state finances, should there be a need for debt waivers. Third, it would be useful to consider the operation of debt relief commissions to have an ongoing process for debt waivers.

MP government waives Farmers Loans

The new Chief Minister of Madhya Pradesh Mr. Kamal Nath signed file waiving of farm loans up to 2 lakhs for all farmers. All this would be one time waiver. It is expected to cost about Rs. 56,000 cr.

Waiving off Agricultural loan

Press Information Bureau
Government of India
Ministry of Agriculture & Farmers Welfare
24-July-2018 15:54 IST

Waiving off Agricultural loan

The Union Government, at present, is not considering any loan waiver Scheme for farmers, as such, waivers may impact the credit culture of a State by incentivising the defaulters, even if they are in a position to repay the loan, and thus, create/amplify the moral hazard by discouraging those borrowers who have been regular in repaying their loans. Further, each waiver granted makes it even more difficult to reject any future similar demand.
Reportedly, various State Governments including Tamil Nadu, Maharashtra, Karnataka, Uttar Pradesh, Jammu & Kashmir, Punjab, Chhattisgarh, Andhra Pradesh, Telangana and Union Territory (UT) of Puducherry have in the recent past announced their own farm loan/debt waiver Schemes to extend relief to the needy farmers. The details of debt/loan waiver announced by these States/UT is given at Annexure.
Loan Waivers announced by various States
Details of States/UTs which have announced Farm Loan Waivers in recent past:

SN Name of State Details
1. Tamil Nadu Government of Tamil Nadu had announced waiver of loans outstanding vide GO No.50 dated 23 May 2016. Outstanding Crop Loan, MT-Agri & LT (Farm Sector) loans issued to Small & Marginal Farmers by the Cooperative Banks as on 31 March 2016 were waived.  Rs.5318.75 crore were waived in respect of 1202075 farmers.
2. Maharashtra The Maharashtra Government announced Debt waiver for farmers vide GR dated 28.06.2017 covering 31 lakh farmers with amount of debt waiver of Rs. 30,500 crore.
3. Karnataka Karnataka government vide Govt. order No CO313 CLS 2017 dated 23 June 2017 announced waiver of farm loans of up to ₹50,000 taken from State-run Cooperative Institutions covering 22 lakh farmers with amount of debt waiver of Rs. 8,165 crore.
4. Uttar Pradesh Government of Uttar Pradesh on April 4, 2017 announced a Rs. 30,729 crore scheme waiving crop loans up to Rs.1.00 lakh for Small and Marginal Farmers. In addition to this, Rs.5,630 crore was allocated for writing off bad loans of around seven lakh farmers, which had become NPAs for banks. This takes the total amount allocated for loan relief to Rs.36,359 crore. The Chief Secretary, Govt. of UP,  vide DO letter dated 24 May 2017 had issued a letter to CMD/CEO of all Scheduled Commercial banks  informing State Govt.’s  decision to implement a scheme for redemption of crop loan debt of Small and marginal Farmers of the state.
5. Jammu Kashmir Jammu & Kashmir Government declared Debt Waiver scheme under KCC   vide Govt order no. 16-F of 2017 dated 23-01-2017.  KCC loans upto Rs. 1 lakh were given 50% waiver in a phased manner.  Total amount waived was Rs.244 crore for 1.15 lakh farmers.
6. Punjab The Punjab Government announced Debt waiver for farmers vide Notification No. 8/259/17-Agri/2(10)/19235 dated 17.10.2017 covering 10 lakh farmers with amount of debt waiver to the tune of Rs.10,000 crore.
7. Chhattisgarh Chhattisgarh Govt. announced Debt relief/waiver vide its notification no. 2838/2015/02-15/30-15F dated 26 December, 2015.   25% of debt waiver was provided for, amounting to Rs. 129.76 crore for 189379 farmers.
8. Union Territory  of Puducherry The Union Territory of Puducherry vide G.O. Ms.10/Coop. dated 12/01/2018 announced the agriculture loan waiver Scheme 2016-17 covering loans of all agricultural and allied activities availed through Cooperative structure as on 31.03.2016.
9. Andhra Pradesh Andhra Pradesh Government announced Waiver of Agriculture crop loan to farmers vide GO Ms.No.164 dated 02.08.2014
10. Telengana The Telangana Government announced Debt waiver for farmers vide GO RT No.69 dated 13.08.2014

This Information was given by the Minister of State for Ministry of Agriculture & Farmers Welfare Shri Parshottam Rupala