Thiruvananthapuram | The Kerala government has launched a one-time settlement (OTS) scheme, 'Ashwas-2026', for borrowers who have defaulted on loans availed from cooperative societies.

The objective of the scheme is to reduce mounting arrears and protect depositors' interests, according to an official statement issued by the office of Co-operation and Excise Minister M Liju.

The 100-day programme, which came into effect on June 1 and will continue till August 31, covers overdue loans taken from Primary Agricultural Cooperative Societies (PACS), the statement said on Saturday.

A key feature of the scheme is the suspension of all attachment and auction proceedings during the implementation period. Penal interest on eligible loans will also be waived in full.

Additional interest concessions of up to 15 per cent may be granted, subject to conditions, in cases involving borrowers suffering from critical illnesses or those having critically ill family members, it said.

All categories of overdue loans would be covered under the scheme, except gold loans and deposit-backed loans.

For small loans up to Rs 50,000 that have remained overdue for more than five years, borrowers will be eligible for a 50 per cent waiver on interest, the statement said adding that in cases where the default period ranges from one to four years, interest concessions between 10 per cent and 40 per cent will be available.

Cooperative societies have been directed to halt recovery actions arising from arbitration cases during the scheme period.

According to the minister's office, the initiative is intended to improve the financial health of cooperative institutions by reducing non-performing assets while providing relief to distressed borrowers.