Farmers in a village in Kerala can now avail of interest-free bank loans by mortgaging trees on their land.
A brainchild of Kerala Finance Minister Thomas Isaac, the project was rolled out this week in Meenangadi, a panchayat in Wayanad district.
The main objective is to encourage planting and preserving trees, and thereby reducing carbon footprint, the Indian Express reported.
“Each sapling can be pledged for Rs 50 per year for a period of 10 years. So if a farmer pledges 100 trees on her land, the bank will pay her Rs 5000 per year for 10 years in the form of a loan. While the interest on the loan is paid by the panchayat, the farmer has to pay only the principal amount, that is, if she decides to cut the tree. If she chooses not to cut down the tree, the loan doesn’t have to be repaid,” said Beena Vijayan, head of the local panchayat.
“The state government had deposited a corpus fund of Rs 10 crores for the project at the Meenangadi service co-operative bank which is used to disburse the loans. The interest from the deposit is used to pay the interest off the loans given to farmers. So far, we have sanctioned loans for 184 farmers in two wards of the panchayat,” she added.