The Tamil Nadu Registrar of Cooperative Societies has directed cooperative banks and societies across the state to immediately suspend all recovery proceedings against farmers with outstanding crop loans, amid mounting demands for a complete loan waiver. The circular, issued on Monday, 22 September 2026, also instructs cooperative institutions to sanction fresh crop loans by 30 September to farmers who have fully cleared their earlier borrowings.

What the Circular Says

In the circular, Registrar of Cooperative Societies G. Latha noted that the government had received complaints alleging that certain cooperative banks and societies were pursuing aggressive recovery measures against farmers who had received only partial relief under the Crop Loan Waiver Scheme 2026. Although a portion of their loans had been waived, several farmers were unable to repay the remaining balance and subsequently defaulted.

All recovery proceedings on such outstanding crop loans must now be kept in abeyance until further instructions are issued, the circular stated. Regional joint registrars and managing directors of district central cooperative banks have been directed to ensure strict compliance, following earlier instructions communicated on 8 July.

Scale of the Waiver Programme

According to Cooperative Department data, crop loans worth ₹15,108 crore were disbursed up to 31 December 2025. Loans totalling ₹5,932.23 crore, issued between 1 May 2025 and 28 February 2026, were identified as eligible for relief under the waiver programme. Under the scheme, the government waived crop loans of up to ₹75,000, irrespective of the extent of land owned by the borrower.

So far, loans amounting to ₹5,267 crore belonging to 13.34 lakh farmers have been cleared under the scheme. That leaves a residual gap between total eligible loans and those already settled — the burden falling squarely on farmers who received only partial relief.

Farmers' Grievances

Farmers had raised two distinct concerns with the authorities. First, that cooperative societies were initiating harsh recovery action against beneficiaries whose loans were only partially waived under the 2026 scheme. Second, that some societies were delaying or outright refusing to sanction new loans for the current agricultural season, even in cases where previous borrowings had been fully settled by the farmer.

The refusal to extend fresh institutional credit ahead of the agricultural season was cited as particularly damaging, as it forces farmers towards informal moneylenders at higher interest rates.

Monitoring and Compliance

Zonal coordinators and bank managing directors have been instructed to 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 directive underscores that enforcement gaps at the ground level had persisted despite earlier circulars.

Impact and What Comes Next

The order is expected to provide immediate relief to farmers facing financial pressure over partially waived loans ahead of the ongoing agricultural season. Eligible cultivators who have cleared all dues will also benefit from the 30 September deadline for fresh loan sanctions. How long the recovery suspension remains in force — and whether it transitions into a broader waiver — will depend on fresh orders from the department, which are awaited.