The State Level Bankers Committee (SLBC) on Monday urged banks to take up with their respective boards a proposal to fully write off loans availed by the victims and survivors of the deadly July 30 landslides in Wayanad district.
Banks will also declare moratoriums ranging from six months to one year on loan repayment, restructure the loans and urgently halt recovery proceeding in the landslides-hit regions, in addition to returning any EMI collected after July 30.
The decisions came at a special meeting of the SLBC which discussed urgent relief measures for the affected people.
In his opening remarks at the meeting, Chief Minister Pinarayi Vijayan urged banks to write off the entire quantum of loans, terming it the only realistic solution given the sheer magnitude of the disaster and the struggles faced by the survivors in its aftermath.
โIt was unanimously agreed that all banks will take up with their respective boards the proposal for a complete waiver of loans availed by the affected individuals in Wayanad. This step is intended to provide significant relief to those whose livelihoods have been severely impacted,โ the SLBC said after the meeting.
Agricultural loans will be rescheduled for a period of five years, which will include a one-year moratorium. A one-year moratorium will also apply to agri-allied activity loans, loans availed by micro and small enterprises.
It was also decided to extend a โneed-based moratoriumโ of up to one year on housing loans and a six-month moratorium on education loan repayment.
The total loan amount, as per the latest available data with the SLBC, is estimated at โน35.3 crore in 3,220 loan accounts in 12 banks. All existing loans, including agricultural, agri-allied, MSME, educational, and housing loans, will be restructured at the earliest.
Recognising the urgent need for financial assistance, the SLBC decided to relax procedures so that fresh loans can be sanctioned to the affected people without hassles. Banks have agreed to provide consumption loans amounting to โน25,000 per individual, with a repayment period of 30 months. โThese loans will be granted without the requirement for security or margin, in accordance with the Reserve Bank of Indiaโs (RBI) circular,โ the SLBC said.
All recovery actions against the affected individuals will be halted with immediate effect. Steps will also be taken to prevent automatic deduction of instalments from their accounts. The SLBC also instructed banks to return EMI deducted from loan accounts after July 30 to the savings bank accounts of customers in the affected areas.
The Chief Minister told the banks that offering the survivors more time to pay up or waiving off the interest on the loan amount will not work in the Wayanad situation.
Many of the people who have availed the loans are dead and the land has been rendered unusable. Moreover, since these loans constitute a mere fraction of the total transactions of the banks, the banks can easily afford a write-off, he said.
โWhile the magnitude of the disaster is huge, the affected region is a small one. The survivors are in a situation where they cannot make the repayment,โ he said. Mr. Vijayan also asked the banks not to press the government to meet the loan commitments in lieu of any write-off.
Commenting on the controversy over Kerala Gramin Bank deducting EMI from the relief aid issued to the survivors, Mr. Vijayan reminded banks that they should not behave โmechanicallyโ in such situations.
Chief Secretary V. Venu and senior government officials attended the meeting.
