Telangana has asked banks to restructure or reschedule crop loans in 365 drought-affected mandals and ensure fresh credit for farmers ahead of the Rabi season, after poor rainfall, depleted reservoirs and weak groundwater recharge disrupted agricultural activity across the state.
The direction was issued at a special meeting of the State Level Bankers’ Committee on drought relief measures for Kharif 2026, held at Praja Bhavan on Tuesday. Deputy Chief Minister Mallu Bhatti Vikramarka, Agriculture Minister Tummala Nageshwar Rao and senior officials attended the meeting.
The state government said crop loans should be restructured or rescheduled under Reserve Bank of India guidelines, depending on the severity of the drought. Wherever applicable, repayment periods may be extended by three or five years. The measure is intended to ease the interest and repayment burden on farmers affected by the current water shortage.
Drought has been declared in 365 mandals across 31 districts, including 111 classified as severely affected, according to the details reported from the meeting. The government attributed the situation to poor rainfall and the absence of expected floods in the Krishna and Godavari rivers. Reservoir levels have fallen sharply, with several reservoirs reaching dead storage levels.
Poor groundwater recharge has also created shortages in an estimated 10 lakh to 15 lakh borewells. The condition is particularly important for farmers dependent on groundwater for crop production, as lower water availability can affect both the choice of crops and the ability to repay existing loans.
With the Rabi season approaching, banks have been asked to immediately disburse the targeted ₹38,268 crore in crop loans. The meeting noted that only 53 per cent of the overall agricultural credit target of ₹96,943 crore had been achieved up to September. Against the ₹1,329 crore target for monsoon farming, only 17 per cent had been disbursed.
Commercial banks were directed to give greater priority to agricultural lending and to support farmers shifting towards lower-water crops such as pulses, oilseeds and horticulture. They were also asked to increase lending for drip and sprinkler irrigation equipment, which the government identified as part of the response to water stress.
The credit strategy is not limited to crop cultivation. The state also sought increased lending for oil palm, dairy, poultry, livestock and beekeeping to provide farmers with alternative sources of income. Banks were asked to strengthen lending to farmer producer organisations and women’s self-help groups.
The government said that increasing lending by up to ₹2 lakh per self-help group, wherever eligible, could improve liquidity in rural areas. The State Level Bankers’ Committee was also directed to monitor education loans and address delays in their sanction.
The directions place banks at the centre of the state’s drought response, combining loan restructuring with new agricultural credit, irrigation finance and support for non-crop livelihoods. The immediate milestones are the restructuring of eligible crop loans under RBI guidelines and the disbursement of Rabi-season credit before the next cultivation cycle advances.
