Karnataka cabinet may clear fresh loan waiver rules

Banks have said no to accepting reimbursement in instalments and waiving interest

Published: 24th August 2018 05:17 AM  |   Last Updated: 24th August 2018 05:18 AM   |  A+A-

Karnataka Chief Minister H D Kumaraswamy

Express News Service

BENGALURU: It is back to square one for Chief Minister H D Kumaraswamy on the massive farm loan waiver plan with banks now reluctant to accept reimbursement in four instalments. The cabinet will meet on Friday to finalise the way forward with banks now demanding repayment of loans in totality. The cabinet is likely to clear the proposal to make a provision for full repayment of loans, at least for those accounts in nationalised banks in the next budget. Kumaraswamy intends to set aside nothing less than `23,000 crore to repay loans waived off by his government in the next budget.

Sources in the Chief Minister’s office said all banks have withdrawn their initial support to accept repayment in instalments over the next four years citing their rule books.“Banks that had initially agreed to waive of interest on the loans have refused to do so now. They have rejected waiving of interest as well as repayment in instalment,” an official from the Chief Minister’s office said, on the condition of anonymity. This poses a new challenge for the Kumaraswamy government that is hoping to repay nationalised banks `6,500 crore set aside for waiver.   “Banks are now reluctant to accept our offer of repayment in instalments. I can’t criticise anyone for this. If someone has meddled in these affairs, I have nothing to say. It is common in politics,” Kumaraswamy told Express.

Leader of opposition in Karnataka assembly B S Yeddyurappa had questioned the feasibility of the government’s instalment plan on the floor of the house during the budget session. “Will the RBI allow repayment in instalments? How will banks issue no-due certificates to farmers without loans being repaid? This is a mere eyewash,” Yeddyurappa had said.

Sources said banks have cited the same reason for withdrawing their support. Sub-committees failed to arrive at a consensus on accepting repayment of loans in instalments, sources said. “We approached them again but to no avail,” the source added. Compelled to go back to the drawing board, the state government has now decided to repay loans at one shot.  “In the cabinet meet, we will not just issue orders for the waiver guidelines but also tell the people how the money will be raised to fund the waiver,” Kumaraswamy said.


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