Waiver plan: Karnataka government to pay Rs 7.4 k crore interest to banks

BENGALURU: The Karnataka cabinet on Friday cleared the state government's plan to waive farm loans availed from nationalised banks. With all nationalised banks refusing to accept zero interest bonds or waiver of interest on current loans, the state government has estimated a burden of Rs 30,160 crore to waive crop loans. The silver lining for the government, perhaps, is the banks agreeing to accept payment in installments but with interest calculated for all four years over which the loan reimbursement will be spread. A sarcastic Chief Minister H D Kumaraswamy thanked "everyone who influenced banks to withdraw their support to the state government". The CM, after a marathon three-and-a-half hour cabinet meeting, said the banks have agreed to issue 'no-debt' certificates to farmers immediately. "We have decided on the quantum to be set aside for the whole package over the next four years. Total loans from nationalised banks are to the tune of Rs 30,160 crore. This is apart from loans availed from cooperative. All put together, the waiver package is worth Rs 42-43,000 crore," H D Kumaraswamy said. The interest alone on the total waiver will run up to Rs 7,419 crore. The government intends to repay the loan from budgetary allocations. "We will make the repayment in less than four years. With this, the farmers will not have to deal with the banks anymore. It will now be between the government and the banks. Fresh loans will be issued," Kumaraswamy added.  The move is expected to benefit 16.94 lakh loan account holders apart from another 6.23 lakh accounts holders who will receive incentives for having repaid loans. In all, the government hopes the plan to waive loans from nationalised banks and incentivise account holders will benefit 23 lakh loanees. "The banks that had earlier agreed to waive interest and accept zero interest bonds have now backed out, thanks to many people. I will not name them, but banks have agreed to accept repayment in instalments, but with interest. I thank every person who contributed to banks withdrawing support," H D Kumaraswamy said accusing vested interests of attempting to embarrass his government. While the Rs 30,163 crore is an estimation made by the government, considering the interest for the next four years, two IAS officers who have been appointed as nodal officers will work out the actual cost to the government after talks with banks "Officials have been appointed to ensure that farmers benefit from the waiver and not banks or middlemen," Kumaraswamy added. The finance department will issue a government order in this regard after which farmers are likely to get 'No-debt' certificates from banks making them eligible for fresh loans. Source: The Indian Express