Banks to offer financial respite to farmers in 101 drought-hit taluks in Karnataka

Banks in Karnataka have come forward to extend relief package to farmers in 101 drought-hit taluks across the State.

The State Level Bankers’ Committee (SLBC), an apex inter-institutional forum created by the Reserve Bank of India (RBI) under the Lead Bank Scheme to coordinate between the banking sector and the State government, convened a special meeting to deliberate on relief measures for drought-affected borrowers, mostly farmers.

According to an SLBC communique, the meeting assumes importance following the State government’s recent declaration of drought in 101 taluks, including 89 severely affected taluks and 12 moderately affected taluks, spread across 24 districts.

The banking sector has agreed in principle to implement a comprehensive relief package for eligible borrowers of agriculture and allied activity in accordance with RBI guidelines.

This will include a 12-month moratorium on loan repayments; extension of repayment period up to 36 months in moderately affected taluks and 60 months in severely affected taluks, and Coverage of Kisan Credit Card (KCC) on loans, investment credit, dairy, fisheries, sericulture and other allied activities. It also offers a fresh need-based credit support to eligible farmers to ensure continuity of agricultural operations and livelihood activities.

Speaking at the meeting, Uma Mahadevan, Additional Chief Secretary & Development Commissioner, State government, emphasised that the objective of the relief package was to ensure that drought-affected farmers receive timely financial support and would be protected from distress during the current agricultural season.

“The State government and the banking sector must work in close coordination to ensure that every eligible farmer receives the benefit of the restructuring package and fresh credit support,’’ she added.

Ms. Mahadevan stressed a humanitarian approach and directed that banks should maintain a sympathetic view towards affected farmers/borrowers during the drought and distress period. Banks have been advised to invoke the relief measures by October 11, 2026, and complete implementation by January 6, 2027.

Shreenath Joshi, convener, SLBC Karnataka, reiterated that banks across Karnataka were committed to implementing the relief package in a transparent, timely and farmer-friendly manner. “The objective is not merely to defer repayments but also to ensure continued flow of institutional credit so that farmers can sustain agricultural and allied activities despite the drought situation,” he added.

The meeting was also attended by Kaya Tripathi, Regional Director, Reserve Bank of India, Bengaluru, Vishal R, Secretary, Fiscal Reforms (FR), Finance Department, GoK, NABARD and other senior officials of the State Government, and member banks.

SLBC’s primary purpose is to drive economic development across the state and the forum, led by Canara Bank in Karnataka, reviews banking developments, implements government-sponsored welfare programmes, manages priority sector lending (like agriculture and housing), and expands financial literacy and rural branch networks. While the broader committee includes government departments, the RBI, and NABARD, all commercial banks, regional rural banks (RRBs), and major cooperative banks operating within Karnataka are its institutional members.