It was on March 5 this year, in response to the havoc wreaked by the August floods, that it was decided to write off farm loans up to Rs two lakh.
But the decision remained on paper.
The State Debt Relief Commission was unable to take it forward because the waiver the government declared had no legal sanction.
Now, nearly four months later, the cabinet has decided to amend the State Debt Relief Commission Act, 2006.
As it stands, the maximum debt relief (including principal, interest and penal interest) that can be granted to a farmer is Rs one lakh.
If the loan amount is Rs 50,000, the Act allows the Commission to provide a relief of 75 per cent. For loans above Rs 50,000, the Commission could write off a maximum of only 50 per cent, subject to a ceiling of Rs one lakh.
The amendment will now push this ceiling up to Rs two lakh.
The amendment will also relax the guidelines for debt relief.
As per the existing guidelines, except for Wayanad, the Commission's cut off date for considering debt relief was loans taken till October 31, 2011.
For Wayanad district alone, it was March 31, 2014.
Once the amendment comes into force, March 31, 2014, will be the new limit for farmers to claim debt relief in all districts except Idukki and Wayanad.
For the two suicide-prone districts, farmers who had taken loans up to August 31, 2018, or even during the last year's floods, can claim waiver of up to Rs two lakh.
“With the cut off date extended right up the flood period for both Idukki and Wayanad, most of the farmer loans taken from cooperative banks will come under the ambit of the waiver,” agriculture minister V S Sunil Kumar told Onmanorama.
The Debt Relief Commission will hold sittings with both the farmer and the cooperative banks from which they had taken loans, meticulously screen their loan portfolios and then decide on the quantum of relief.
The law now allows the Debt Relief Commission's sway over only cooperative banks.
The government now wants commercial banks, too, to come under the authority of the Debt Relief Commission.
“During the State-Level Bankers' Committee (SLBC) meeting, we had put forward the proposal to the banks. They had expressed their willingness,” the agriculture minister said.
He said the General Administration Department had been asked to quickly submit a proposal to the government related to debt relief from commercial banks.
This proposal will then be sent to the SLBC for their consideration.
The debt relief guidelines are expected to be different for cooperative and commercial banks.
Other conditions put forward in the Act for debt relief will not be relaxed.
One, the applicant should be a small or marginal farmer, who owns or has taken on lease a crop area of less than five acres. Two, the applicant’s annual income should not be over Rs 2 lakh.
