Karnataka Drought Relief: Banks Offer 12-Month Moratorium, Extend Farm Loan Repayment Up to Five Years in 101 Taluks
Bengaluru: Farmers in Karnataka’s 101 drought-affected taluks will get a 12-month moratorium on repayment of agricultural and allied-sector loans, while the overall repayment period will be extended to as much as five years under a relief framework announced by the State Level Bankers’ Committee (SLBC).
According to the minutes of a meeting chaired by the Karnataka Chief Secretary, the measures will cover Kisan Credit Card (KCC) loans, agricultural loans and credit linked to allied activities including dairy, sericulture and fisheries.
The state government has declared 101 taluks across 24 districts as drought-affected. Of these, 89 have been classified as severely drought-affected and 12 as moderately drought-affected.
Under the relief framework, eligible agricultural and allied-sector loans will receive a 12-month repayment moratorium.
For farmers in moderately drought-affected taluks, the repayment period will be extended to 36 months, or three years. In severely drought-affected taluks, the repayment period will be extended to 60 months, or five years.
The relief will not be restricted to rescheduling existing debt. Banks will also be able to provide fresh loans to farmers based on their immediate requirements and in accordance with their respective lending norms.
The framework is also intended to apply automatically if the Karnataka government subsequently declares additional taluks drought-affected. In such cases, a separate SLBC meeting will not be required to extend the relief framework to the newly notified areas, according to the information provided.
Banks have been directed to implement the relief measures by October 11, 2026, within 45 days of the drought declaration.
The entire relief process is to be completed by January 9, 2027, within the stipulated 135-day period.
Canara Bank, in its capacity associated with the SLBC, will upload the final proceedings of the meeting on the relevant portals by September 26, 2026.
The directions also include a strict “zero tolerance” approach towards coercive loan recovery from farmers during the year.
District administrations have been instructed to respond immediately to complaints from farmers and to contact the banks concerned before any recovery process is undertaken.
The government has also proposed a coordinated awareness exercise to ensure that farmers receive information about the relief measures.
Deputy Commissioners, Chief Executive Officers and Lead District Managers will participate in video conferences along with officials from the agriculture, horticulture, animal husbandry and disaster management departments to disseminate information about the measures to farmers.
Separate measures are being considered for loans issued through the cooperative banking sector. The Chief Secretary said the issue of extending repayment periods for cooperative bank loans would be discussed with NABARD and at the state government level, following which an appropriate relief mechanism would be worked out.
The measures are aimed at easing immediate repayment pressure on farmers in drought-affected areas while allowing additional time for agricultural and allied-sector borrowers to restructure their repayment obligations.
About the Author
