The increase in interest subvention will ensure stability of credit flow to the agriculture sector.
New Delhi:
The Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved an interest subvention of 1.5 per cent per annum on short-term agricultural loans up to Rs 3 lakh.
Provide 1.5 percent interest subvention to lending institutions (Public Sector Banks, Private Sector Banks, Small Finance Banks, Regional Rural Banks, Co-operative Banks and Commercial Banks with direct computerized PACS) for the financial years 2022-23 to 2024. 25 for giving short-term agricultural loans up to Rs 3 lakh to farmers, according to an official statement issued after the cabinet meeting.
This increase in interest subvention support requires additional budgetary provisions of Rs 34,856 crore for the period from 2022-23 to 2024-25 under the scheme.
“The decision has been taken to ensure adequate credit flow to the agriculture sector,” Union Information and Broadcasting Minister Anurag Thakur said while addressing a media briefing after the cabinet meeting.
The increase in interest subvention will ensure stability of credit flow to the agriculture sector as well as ensure the financial health and viability of lending institutions, especially regional rural banks and co-operative banks, ensuring adequate agricultural credit to the rural economy.
Banks will be able to absorb the increase in the cost of funds and farmers will be encouraged to give loans for short-term agricultural needs and more farmers will be able to get the benefits of agricultural credit. This will also create employment opportunities as short-term agricultural credit is provided for all activities including animal husbandry, dairy, poultry, fisheries.
Farmers will continue to get short term agricultural loans at an interest rate of 4 per cent per annum while repaying the loan on time.
Ensuring hassle free credit availability to farmers at affordable rates has been the top priority of the Government of India. Accordingly, as per an official statement issued by the Ministry of Agriculture and Farmers Welfare, the Kisan Credit Card scheme was launched for farmers, so that they can buy agricultural products and services on credit at any time.
In order to ensure that farmers pay a minimum rate of interest to the bank, the Government of India introduced the Interest Subvention Scheme (ISS) to provide short-term loans to farmers at concessional interest, now known as the Modified Interest Subvention Scheme (MISS). ) is named. rates.
Under this scheme, short term agricultural loan up to Rs.3.00 lakh is available to the farmers engaged in agriculture and allied activities at the rate of 7 percent per annum.
Farmers are also given an additional 3 percent subvention (Prompt Repayment Incentive – PRI) for prompt and timely repayment of loans. Therefore, if a farmer repays his loan on time, he gets a loan at the rate of 4 per cent per annum.
To enable this facility to the farmers, the Government of India provides Interest Subvention (IS) to the financial institutions offering this scheme. This assistance is 100% funded by the Centre, it is also the second largest scheme of DA&FW in terms of budget outlay and coverage of beneficiaries.
Recently, under Atmanirbhar Bharat Abhiyan, new Kisan Credit Card (KCC) has been issued to more than 3.13 crore farmers against the target of 2.5 crore. Special initiatives like KCC saturation campaign for farmers enrolled under PM-KISAN scheme have also simplified the process and documentation involved for sanctioning KCC.
Keeping in view the changing economic scenario, especially keeping in view the increase in the interest rate and lending rates for financial institutions of Co-operative Banks and Regional Rural Banks, the Government has increased the rate of interest subvention provided to these financial institutions. is reviewed. It is expected that this will ensure adequate credit flow to the farmers in the agriculture sector as well as the financial position of the lending institutions.
To address this challenge, the Government of India has decided to restore the interest subvention on short-term agricultural loans to 1.5 per cent for all financial institutions.
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