Chennai: TVK leader Vijay has promised that if his party comes to power, farmers’ crop loans will be waived. However, cooperative department officials have questioned whether such a waiver can be practically implemented.
Officials said cooperative banks and societies extend loans using funds borrowed from NABARD (National Bank for Agriculture and Rural Development) and deposits mobilised from the public. They argued that while a waiver may help poorer borrowers, it often ends up benefiting well-off borrowers too, leading to waste of public money.
They also pointed out that governments typically do not reimburse cooperative institutions immediately after announcing a waiver. Instead, the waiver amount is paid in instalments over about five years, pushing societies into financial stress.
To address this, the Reserve Bank of India issued instructions in 2024 stating that waiver reimbursements should not be paid to societies in instalments. The full amount should be released in a single tranche within 45–60 days; otherwise, the outstanding amount would remain reflected in the customer’s bank account.
With several state governments, including Tamil Nadu, already facing financial constraints, officials said it would be difficult for any government to pay the entire waiver amount within two months. They added that this is why the ruling DMK did not include a crop loan waiver promise in its election manifesto.
