The unprecedented move of the Government to waive the entire crop loan outstanding in the Cooperative Banks as on 31.3.2006 have benefited lakhs of farmers to break the debt trap besides giving a new lease of life to the cooperative credit institutions.

Following this path breaking efforts of the Government of Tamil Nadu, the Government of India has now made an announcement of massive agricultural loan waiver to the extent of Rs.60,000 crores during 2008-09 budget. This laudable initiative taken by the Government of India to redeem the farm sector from the stagnation is expected to trigger further growth in agricultural sector. It is expected that this loan waiver announced by the Government of India will be fully extended to Tamil Nadu and the amount released already by the Government of Tamil Nadu as loan waiver will be fully compensated by the Government of India on the eligible components.

(ii) Interest subvention for crop loan

The crop loan has been extended with the concessional rate of interest by reducing the effective rate of lending from 9% to 7% with effect from 2006-07. Further to imbibe the discipline of better repayment among the farmers, the Government of Tamil Nadu has ordered to give further interest subvention @ 2% from 2007-08 so that the effective rate of lending of crop loan to the farmers who are prompt in repaying the loans will be 5%.

During 2008-09 budget, the Government have further reduced this rate to 4% for crop loan lending.

(iii) Interest reduction for Non-Farm Sector Loans

The Government have ordered to reduce the rate of interest to 12% on all the outstanding non-farm sector loans as on 31.3.2001 availed from the cooperative credit institutions besides completely waiving the penal interest as a one time measure to wipe out the overdues. Under this scheme, the borrower has to remit 25% of the outstanding and avail the concessions extended and pay the remaining 75% within the stipulated period.

(iv) Jewel Loans

The cooperative banks issue loans on the pledge of jewels both for agriculture and non-agriculture purposes. The jewel loans are more popular among the public and banks are more secure and borrowing is hassle free for the beneficiaries.

(v) Kisan Credit Card Scheme

The Kisan Credit Card Scheme is being implemented to provide timely credit to the farmers so that delay in disbursement of credit is minimized.