Tamil Nadu halts crop loan recovery, orders fresh credit to eligible farmers

Coimbatore: The Tamil Nadu Registrar of Cooperative Societies has ordered cooperative banks and societies across the state to temporarily suspend recovery proceedings against farmers with outstanding crop loans amid growing demands for a complete loan waiver.

The department has also instructed cooperative institutions to sanction fresh crop loans by September 30 to farmers who have fully repaid their earlier borrowings and have no pending dues.

In a circular issued on Monday, Registrar of Cooperative Societies G. Latha said the government had received complaints that some cooperative banks and societies were adopting stringent measures to recover dues from farmers who had received only partial relief under the Crop Loan Waiver Scheme 2026.

Although part of their loans had been waived, several farmers were unable to repay the remaining amount and subsequently defaulted.

All recovery proceedings relating to such outstanding crop loans must now be kept in abeyance until further instructions, the circular said.

According to Cooperative Department data, crop loans worth Rs 15,108 crore were disbursed up to December 31, 2025. Loans totalling Rs 5,932.23 crore, issued between May 1, 2025, and February 28, 2026, were identified as eligible for relief under the waiver programme.

Under the scheme, the government waived crop loans of up to Rs 75,000, irrespective of the extent of land owned by the borrower.

So far, loans amounting to Rs 5,267 crore belonging to 13.34 lakh farmers have been cleared. The latest intervention follows representations from farmers alleging that several cooperative societies had initiated harsh recovery action against beneficiaries who received only a partial waiver.

Farmers also complained that some societies were delaying or refusing to sanction new loans for the current agricultural season even after previous borrowings had been fully settled.

Referring to instructions issued on July 8, the registrar directed regional joint registrars and managing directors of district central cooperative banks to ensure strict implementation of the latest order.

Zonal coordinators and bank managing directors must immediately communicate the directions to all primary cooperative societies under their jurisdiction, closely monitor compliance and prevent any further recovery action until fresh orders are issued.

The decision is expected to provide immediate relief to farmers facing pressure over partially waived loans. It will also help eligible cultivators obtain timely institutional credit for the ongoing agricultural season before the September 30 deadline.

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