Karnataka plans law to waive farm loans from money lenders

Karnataka plans law to waive farm loans from money lenders
Click for full image

Bengaluru: Karnataka plans to make a law to get waived the loans farmers and landless agricultural labourers took from moneylenders to provide them debt relief, said an official on Saturday.

“The state cabinet has decided to enact a law that prohibits moneylenders from recovering loans given to farmers and landless labourers whose annual income is less than Rs 1.25 lakh per annum and own less than two hectares of dry land or half acre irrigated land,” the official told IANS here.

As the state legislature is not in session, the state government plans to bring the law through an ordinance and enforce it after the Governor’s approval and assent of the President.

“The law will have a provision to levy Rs 1.25-lakh fine or one-year jail term or both on the moneylenders if they force the beneficiaries to repay by coercion,” said the official.

State Law and Parliamentary Affairs Minister Byre Gowda told reporters here the Karnataka Debt Relief Ordinance, 2018 would be promulgated to provide relief to small and marginal farmers who take loans from moneylenders, mortgaging their lands.

The move comes a fortnight after the Janata Dal-Secular (JD-S)-Congress coalition government on August 10 decided to waive crop loans raised by farmers from the state cooperative banks and state-run (nationalised banks) to the tune of Rs 43,448 crore, including additional loans up to Rs 9,448 crore till July 10.

“As many small and marginal farmers and landless workers borrow money from private lenders by pledging their assets like agriculture lands or gold jewellery at high interest rate, the government is committed to provide relief to them as in the case of other farmers who borrow from banks,” Gowda asserted.

The beneficiaries will have to apply to the jurisdictional Assistant Commissioners in their respective districts to claim the debt relief by providing details of the amount borrowed and from which money lender with documents or assets hypothecated.

“A similar law was enacted in the state in 1976 and 1980 through the ordinance route. Based on same experience, we have decided to enact it through the Karnataka Debt Relief Act, 2018,” reiterated Gowda.

The government hopes the new law will free the farmers and labourers from the clutches of moneylenders if they are unable to repay their loans because of high interest rates and poor returns from their farmlands.