Govt approves continuation of interest subvention scheme for farmers

Mumbai: The government has approved the continuation of interest subvention scheme for short-term loans of up to Rs 3 lakh for agriculture and allied activities availed through Kisan Credit Card (KCC) during the current financial year.

Under the scheme, farmers get loan at a concessional interest rate of 7 per cent. An additional interest subvention of 3 per cent per annum is provided to farmers who repay loans in time.

"This also implies that the farmers repaying promptly as above would get short-term crop loans and/or short term loans for allied activities including animal husbandry, dairy, fisheries, bee keeping etc. @ 4 per cent per annum during financial year 2024-25," the RBI said.

In a circular, the Reserve Bank said the rate of interest subvention to lending institutions will be 1.5 per cent for 2024-25.

"The limit for crop loan component will take priority for interest subvention and prompt repayment incentive benefits and the residual amount will be considered towards allied activities including animal husbandry, dairy, fisheries, bee keeping, etc.," it said.

In order to discourage distress sale by farmers and to encourage them to store their produce in warehouses, the benefit of interest subvention under KCC will be available to small and marginal farmers for a further period of up to six months post the harvest of the crop.

To provide relief to farmers affected by natural calamities, the applicable rate of interest subvention for that year will be made available to banks for the first year on the restructured loan amount, the RBI circular said.

Such restructured loans will attract normal rate of interest from the second year onwards.

To ensure hassle-free benefits to farmers under the Modified Interest Subvention Scheme (MISS), Aadhaar linkage would continue to be mandatory for availing the above-mentioned short-term loans in 2024-25.