Banking Recovery Paused: Finance Minister to Review Debt Relief for Coffee Sector
In a significant move for the plantation sector, Union Finance Minister Nirmala Sitharaman has reportedly instructed banks to halt the e-auction of coffee estates in regions like Sakleshpur, Chikkamagaluru, and Kodagu.
This intervention comes after intense pressure from coffee growers’ associations and a high-level meeting in Delhi on February 11–12, 2026.
Key Details of the Intervention
The Problem: Banks had initiated recovery proceedings under the SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act) against approximately 6,000 coffee growers in Karnataka who defaulted on loans.
The Delegation: A group of Karnataka MPs, including former Prime Minister H.D. Deve Gowda and Udupi-Chikkamagaluru MP Kota Srinivas Poojary, met the Finance Minister to highlight the “draconian” impact of these auctions on small-scale planters.
The Action: The Finance Minister has directed officials to examine the matter and instructed banks to pause the online auctions immediately. She has also committed to reviewing whether coffee plantations should be granted more protections, as they are currently not classified as “agricultural land” under SARFAESI exemptions.
Why This Matters to Growers
For many planters in the Malnad region, these auctions were seen as a threat to their ancestral livelihoods. The Karnataka Growers’ Federation (KGF) had raised concerns that:
Market Prices: Middlemen were allegedly trying to grab distressed properties at undervalued prices through online auctions.
Lack of Awareness: Many small-scale farmers were unaware that their properties were even listed for auction on digital platforms.
One-Time Settlement (OTS): While an OTS scheme existed (ending June 2025), only a small fraction of growers (about 518) were able to utilize it due to ongoing financial distress from climate change and rising labor costs.
Current Status
While the auctions are temporarily halted, the government is now expected to look for a long-term solution, possibly involving a restructuring of the SARFAESI application to plantation crops or a new debt relief package
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