One-Time Loan Settlement: Struggling Farmers in Rajasthan

Table of Contents

Summary

The One-Time Settlement (OTS) scheme for Rajasthan delivers vital relief for indebted farmers. Farmers pay only the principal and enjoy a 100% waiver on interest and the option for re-loans with subsidy benefits. Targeted at loans that are pending as of March 31, 2024, and associated with Land Development Banks, the scheme is supported by ₹200 crore and aims to bring back ₹760 crore. It enables the restoration of creditworthiness, alleviates financial pressure, and facilitates long-term agricultural stability. In contrast to complete waivers for loans, OTS promotes prudence and rewards the bank system by recovering dues. The Rajasthan government also proposes other farmer benefits for 2025, such as interest-free loans, subsidy benefits for traditional and greenhouse farming, and water harvesting rewards. This integrated solution is freeing rural communities from debt loops and regaining financial health.

Introduction

Rajasthan farmers have historically been plagued by financial instability caused by crop losses, erratic weather, and increasing agricultural expenditures. These issues pushed many farmers into a cycle of debt, owing overdue loans and being cut off from fresh credit. In response, the Rajasthan government launched the One-Time Loan Settlement (OTS) scheme — a pragmatic intervention to lighten the financial burden on distressed farmers. As distinct from conventional loan waivers, the OTS scheme enables farmers to clear outstanding loans by paying back only the capital and getting a total waiver on interest. This move benefits farmers immediately and also makes them eligible for future loans, enabling them to invest once again in agricultural activities. Supported by financial allocations and tied to larger welfare programs, the OTS scheme is emerging as a key driver for rural revitalisation and sustainable development in Rajasthan.

What Is the One-Time Loan Settlement Scheme?

The Rajasthan government has launched the One-Time Loan Settlement (OTS) Scheme as a major step to relieve farmers’ financial pressure. The scheme is for farmers who are under pressure from overdue loans to help them return to financial stability and secure future credit.

Important Features of the Scheme

The OTS Scheme provides farmers with an opportunity to pay a lower amount and wipe out their outstanding loans. According to this deal:
Farmers who repay their loan principal will receive a full waiver on simple and punitive interest.
Eligible farmers can utilise a re-loan with a 5% subsidy to facilitate greater agricultural activity.
Aiming at Land Development Banks, the scheme is for farmers whose debts are overdue by March 31, 2024.

Looking to recoup an estimated ₹760 crore in unpaid loans, the Rajasthan government has allotted ₹200 crore for financing this endeavour.

Impact on Farmers

Financial Relief and Stability

For many farmers, the OTS Scheme provides a much-needed respite from the cycle of debt. By clearing their overdue loans at a reduced amount, farmers can alleviate financial stress and focus on improving their agricultural practices.

Access to Future Credit

Clearing existing debts enhances farmers’ creditworthiness, making them eligible for future loans. This access to credit is crucial for purchasing seeds, fertilisers, and other essentials, thereby boosting agricultural productivity.

Application Process

Steps to Avail the Scheme

Farmers interested in benefiting from the OTS Scheme should follow these steps:

Visit the closest Land Development Bank: Go to the bank from which the loan was first taken.
Send the required paperwork. Send loan information, identification evidence, and any other needed paperwork.
Pay back the principal. To enjoy the interest waiver, pay the outstanding principal.
Apply for the 5% subsidised re-loan facility if you qualify.

The deadline to avail of the scheme is September 30, 2025.

Challenges and Considerations

Ensuring Fair Implementation

Although the program is beneficial, it must be ensured that it is equitably and transparently implemented. Clear details about the conditions and the terms must be given to the farmers so that uncertainty is avoided.

Long-term financial planning

Despite the fact that the OTS Scheme is an instant source of financial relief, it does not dispense at all with the requirement for long-term financial planning. Financial and production practices which are sustainable must be followed by farmers in order to avoid further debt.

How One-Time Loan Settlements Are Helping Rajasthan Farmers Break the Debt Cycle

Challenges Facing Farmers in Rajasthan

Rajasitan farmers have, over the years, battled rising debt from high-interest loans, unpredictable weather, and recurrent crop failures. Most small and marginal farmers found out years ago that they were trapped in a debt cycle of borrowing to survive. Paying back seemed impossible with low earnings and accumulating debt.

Explain a one-time loan settlement.

A mutually agreed settlement between the borrower and the lender or bank to settle an outstanding loan for a lesser amount than what used to be due is a one-off loan settlement. Typically given when the borrower cannot repay the full amount and the lender wishes to recover some of the dues instead of incurring total loss.

Today, this option is being utilised in Rajasthan to empower struggling farmers to get financial control.

How This Scheme Is Benefiting Farmers

Acting in tandem, cooperative banks and the state government are offering eligible farmers settlement options. Under this scheme, a portion of the outstanding loan is written off, and the remaining amount is either government-guaranteed or rebuilt for easier payback.

Many farmers have been able to close their long-pending loans and start again with this action. Farmers who clean their credit histories are once more qualified to get fresh loans for machinery, seeds, fertilisers, or agricultural operations. It also lessens the mental strain resulting from ongoing lender pressure.

Encouraging Positive Change in the Rural Economy

Farmers have greater access to official financial networks and government support as debts are being repaid. They are able to make reasonable, small loans with decent terms rather than relying on local moneylenders who charge high interest. This shift is stirring new hope and restoring confidence in the banking system among farm communities.

Recovering part of the debts that would otherwise have been written off is advantageous to banks as well. This makes the process of settling a benefit-only process for both parties.

Moving Towards Financial Stability

The one-time settlement scheme assists families to rebuild their life, not just retires debt. Farmers who have escaped the debt trap now focus more on production and planning for long-run. Most are now looking for a secure and stable future with enhanced financial relief and support facilities.

Thousands of farmers now receive a second lease of life as this change slowly but surely alters Rajasistan’s rural landscape.

Step-by-Step Guide: How Farmers in Rajasthan Can Apply for a One-Time Loan Settlement

Why One-Time Loan Settlement Matters for Farmers

Increasing costs of inputs, drought-like conditions, and crop losses all go to create financial troubles that Rajasitan farmers face. Common consequences of these are pending agricultural loans. The government and cooperative banks introduced the one-time settlement of loans program to assist to alleviate this burden. It allows farmers to begin again by enabling them to settle their dues at a reduced amount.

Who Can Apply for the Settlement

Basic Eligibility

The farmer must be a resident of Rajasan.
The loan should be from a sound cooperative organisation or bank.
The loan account must be noted as either non-performing or overdue.
Small or marginal land owners or farmers are generally accorded the highest priority.

Where Should One Apply for a Settlement Loan?

Go to the Nearest Bank Branch

Farmers should visit the branch through which they have taken money on loan. Bank or cooperative society employees will guide them through the correct application format and documentation requirements.

Check with Local Agriculture Offices

Local agriculture offices of different states collaborate with banks to promote the program. The offices may also assist with filing forms and document authentication.

Documents Required for Application

Original loan documents or a replica passbook
Aadhaar document or identification confirming document
Patta copies or land title documents
Proof of income or crop failure, in case the bank requires it

Having these documents at hand reduces delays and speeds up the process.

How the Settlement Process Works

Application Review and Approval

The bank reviews the application when the farmer submits it. The bank makes an offer of settlement based on the debt burden and history of repayment. Both parties sign the agreement when the farmer agrees.

Payment of Settled Amount

Depending on the arrangements, either in a lump sum or in easy installments, the farmer repays the agreed amount. The loan account is closed and the books are updated upon full repayment.

Record Clearance and New Loan Access

The farmer is eligible to apply for new credit once the settlement is complete. This provides financial security and future access to government schemes.

Advantages of Application

For farmers buried under debt, the upfront loan settlement presents a great opportunity. It brings relief, helps with credit history recovery, and builds new growth and farm planning opportunities.

Government Support for Farmer Debt Relief in Rajasthan: What You Need to Know in 2025

One-Time Settlement Scheme for Loan Defaulters

The “Ek Must Samjhota Yojana 2024” enables farmers to pay off their pending loans by paying only 25% of the pending amount. This scheme is for loans pending as of March 31, 2023, and provides an interest rate of 8% or the initial loan rate, whichever is less. The last date to take advantage of this facility is March 31, 2025.

Interest-Free Loans and MSP Bonus

According to the 2025-26 budget, the government has proposed interest-free loans of ₹25,000 crore to 35 lakh farmers. Apart from this, a bonus of ₹150 per quintal on wheat is granted under the Minimum Support Price (MSP) scheme.

Subsidies on Traditional Farming Techniques

For traditional farming, a subsidy of ₹30,000 per ox pair is given to small and marginal farmers practising animal-powered agriculture.

Help for High Value Crop Growing

The “Naye Fal Bagecho Ki Sthapana” scheme encourages farmers to cultivate high-value fruit plants through the provision of financial assistance and subsidies for setting up new orchards.

Incentives for Greenhouse Farming

Subsidies of 50% and 70% are offered to farmers, respectively, for greenhouse farming. An extra 25% subsidy is provided to farmers belonging to notified tribal areas and small/marginal farmers.

Water Conservation Measures

Diggi Subsidy Scheme offers a maximum of ₹3.4 lakh for field water tank construction, encouraging effective water management and irrigation practices. Marginal and small farmers are offered an 85% subsidy, whereas others get 75%.

Simplified MSP Procurement Process

The registration cap for the purchase of chickpea (chana) and mustard under the MSP scheme has been eliminated, making farmers’ selling process easier.

Solar Power Integration in Agriculture

With over 1,000 MW capacity under PM-Kusum projects, Rajasthan has achieved a milestone. With this achievement, 1.7 lakh farmers get daytime electricity, thus enhancing efficiency and negating the challenge to irrigate at night.

Why One-Time Loan Settlements Are a Better Alternative to Traditional Loan Waivers

Understanding the Difference

Oftentimes in economic distress, farmers are looking to the government for assistance. debt waivers and debt settlement one time are two commonly employed tactics. While both aim to lessen debt, they work very differently and yield varying long-term outcomes.

A loan waiver frees the farmer from repayment by the government cancelling the entire outstanding loan. A one-time settlement, on the other hand, is a mutual agreement between the lender and borrower where the borrower repays less of the loan and the balance is waived.

One-Time Settlements Foster Responsibility

Farmers can just wait for the announcement of the next waiver, hence, conventional loan waivers can become a culture of delayed repayment. In rural areas, this destroys the culture of credit. Single-shot settlements, however, involve the farmer facilitating payback, hence sustaining the culture of financial responsibility.

Farmers in settlements act aggressively to settle their debts. This builds confidence with banks and allows them to maintain a clean credit record in the future.

Improved for the Banking System

Loan waivers disrupt rural bank operations and usually result in a huge financial strain on state budgets. Banks end up becoming hesitant to lend once they fail to receive timely compensation.

Banks recover at least to some extent through ad hoc settlements. This enables them to remain healthy, continue lending, and in the long run help more farmers. It keeps the rural credit cycle running and viable.

Quicker Turnaround and New Loan Availability

Typically involving painstaking procedures, waivers of loans take time to implement. At times, farmers wait months for clearance, in the interim their financial situation worsening.

When the amount that has been agreed upon and paid in one-time settlements is known, the loan is marked as cleared. Especially in critical cropping seasons, it is able to bring farmers quicker access to new loans, fertilizers, seeds, and other inputs.

Builds Long-Term Financial Health

One-time grants not only offer temporary aid but also enable farmers to reenter official financial institutions. Farmers are more suited to make investments in better machinery, diversify crops, and plan when their credit scores are higher and their relationship with lenders is positive.

One-time settlements are showing to be a more balanced and successful strategy than complete debt waivers by helping financial discipline while yet providing relief.

Conclusion

The One-Time Loan Settlement scheme is proving to be a pivotal step end to the long debt trap for farmers in Rajasthan. Taking a pragmatic and equitable approach to settling loans, it empowers farmers to settle their accounts free from the debilitating burden of compounding interest. Unlike outright waiver of loans, the scheme encourages financial discipline, maintains rural banks in good health, and restores farmers’ access to formal financing mechanisms. In addition to other government schemes such as interest-free loans, farm subsidies, and irrigation assistance, the OTS scheme contributes to a safer and self-sustaining agri-economy. With finances in their hands, farmers can resort to increasing productivity, deficit financing, and long-term growth planning. With proper awareness and open implementation, the OTS scheme can immediately transform rural livelihoods across the state.