Banks in Kerala will seek the permission of Reserve Bank of India (RBI) to extend moratorium on loan recovery proceedings on farmers till December 31. In the wake of rising spate of farmer suicides in Kerala, the State-level Bankers’ Committee (SLBC) has also favoured increasing the loan limit from Rs 1 lakh to Rs 2 lakh.

“Banks have agreed to Kerala chief minister Pinarayi Vijayan’s suggestion to stop loan recovery proceedings. They were also supportive of the state government’s move to find ways to include commercial banks under the purview of the Agriculture Debt Recovery Commission,” Kerala agriculture minister VS Sunil Kumar told FE, after a meeting of SLBC convened by the CM.

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For long-term crop loans such as rubber, coffee and coconut, the banks were to forgo up to 9% interest and the amount will be disbursed from the Chief Minister’s Relief Fund. “We are undertaking the interest burden for the current year, to clean up the farmers’ loan books and make them entitled for new loans,” Vijayan said, at the SLBC meeting. This will be applicable not just to farm loans, but also loans for agri-related and allied activities.

Since many of these measures would need RBI clearance, bank heads will write to the Central Bank for the permission, SLBC convener GK Maya has assured the state government. As the lead bank in Kerala, Canara Bank accounts for convening the SLBC. SLBC will ask its member banks to sanction fresh loans to farmers so that they can get back to their cultivation, without staying depressed over the crop losses after the unusual floods in August 2018.

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In the last two months, as many as nine farmers committed suicide in Kerala over mounting debts. Many of them had reportedly taken the fatal decision after receiving recovery notices from the respective banks when they defaulted on the loans.

Idukki and Thrissur districts had encountered huge devastation in crops, livestock, property and lives during the deluge in August 2018.