Bengaluru: A day after Reserve Bank of India (RBI) cautioned Karnataka and other States against “jumping onto the farm-loan waiver bandwagon, by observing that loan waivers impact credit discipline and vitiates credit culture”, the State Government today announced that it will waive off loans taken by small and medium farmers from Co-operative and Agricultural banks.

Making an announcement at the Legislative Assembly this afternoon, Chief Minister Siddharamaiah said that the State will waive off loans up to Rs. 50,000 taken by farmers from all Co-operative, Agricultural and other Co-operative Banks. “We will waive off loans that were taken till yesterday (June 20),” the CM said.

The loan waiver will benefit over 22 lakh small and medium farmers in the State and will be an additional burden of Rs. 8,165 crore on the State Exchequer, the CM added.  About 23 lakh farmers have obtained farm loans totalling about Rs. 10,500 crore through Co-operative Banks. The figure is much higher for nationalised banks that have offered loans worth Rs. 42,000 crore to about 33 lakh farmers.