Commercial banks have agreed to declare one-year moratorium on farm loans in the backdrop of severe drought situation in the State.
They will also call a halt to recovery proceedings as per decisions arrived at a meeting convened by the State Government here.
This will be complimented with rescheduling of respective farm loans to medium term and long term tenures. The moratorium shall be effective for outstanding loans as on December 31, 2012, when the State was declared drought-hit.
It will not be applicable for loans defaulted and proceeded against, according to Finance Minister K. M. Mani.
Cooperative banks have already implemented the package, he said after the meeting with State-Level Bankers’ Committee (SLBC).
Banks have also agreed not to charge penal interest while rescheduling loans.
Earlier, Chief Minister Oommen Chandy requested bankers to join the effort to mitigate the impact of the drought.
The emerging scenario is of a scale not witnessed for quite sometime in the recent past, he said.
The Government has gone out of its way to prepare itself to deal with the situation, but this was evidently proving not enough.
Explaining, he said ministers had been put in charge of relief work at the district level to ensure that ‘supply lines’ are working.
District-level monitoring teams had been asked to salvage drinking water supply lines wherever in state of disrepair.
Unlike other States facing drought, the season has delivered a triple whammy for the State of Kerala, the Chief Minister said.
Kerala mostly relies on hydroelectric power and finds itself in a bind since reservoir levels are plumbing new lows. So the crisis unfolds at three levels, viz. drinking water, power generation and longer-term implications for agriculture.
Farmers were going to face the toughest of times since the destructive impact of the drought might hit them with a lag.
“This could play out over a period of the next three years, and in some cases even beyond,” the Chief Minister warned.
Initially, four districts were declared drought-hit; the government had to extend it to the rest after the ‘dry run’ held on with no relent.