Despite a surge in coffee prices, growers in Karnataka – the largest producing State – are not willing to repay their loans, bankers said.

The issue of non-performing assets (NPAs) and recovery in coffee loans figured at the 129th meeting of the State Level Bankers Committee on Monday.

“It is a matter of concern that the NPAs in the coffee advances are mounting and bankers are finding it to difficult to recover them,” said TK Srivastava, Executive Director, Syndicate Bank, the lead banker in the State.

Further, Srivastava sought co-operation of the Coffee Board as well as the State administration to help bankers recover loans.

According to bankers, coffee growers owe a total of around ₹1,250 crore in Karnataka. Of this, dues including the NPAs are pegged at around ₹850 crore and are rising.

Major bankers in the coffee-growing regions of Karnataka including Syndicate Bank, State Bank of Mysore, Canara Bank, State Bank of Mysore and Corporation Bank among others have exposure to the coffee loans. The bank wise break-up was not available.

Bankers said that loans sanctioned and disbursed prior to 2002 are still outstanding, even after repeated restructuring in the line of package advised by the Coffee Board.

Also the Kisan Credit Card loans disbursed after 2002 are not renewed by planters for several years. Further, term loan instalments are not being paid, even as per the restructured payment schedule, while some planters are reluctant to even sign letter of revival, they said.

The Karnataka Government is expected to take up the issue with the Coffee Board on taking steps to reduce the NPAs.

In 2010, the Centre had announced a ₹363-crore debt relief package for the coffee sector, that benefitted largely the small growers.

Coffee prices are on a upswing in the recent past on concerns over supplies from Brazil, the largest producer.

K Kurian, Chairman of the Karnataka Planters Association, said that it was possible that a section of growers could not have repaid their loans.

He said coffee prices have gone up only in the recent past and due to volatility and one is not sure of how long this would be sustained.

He said that growers, reeling under the impact of changing climate, have faced higher incidence of pest attacks this year, especially the white stem borer menace that will have an impact on the yield and output.

The State-run Coffee Board has pegged the 2014-15 crop at 3.44 lakh tonnes comprising 1.05 lakh tonnes Arabica and 2.39 lakh tonnes Robusta.

The Board is yet to come out with its post-monsoon forecast for the 2014-15 season. However, growers expect it to be around last years levels at 3 lakh tonnes.

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