Cabinet extends 3% interest subvention for crop loans

22 Jul '15

2 min read

The Union Cabinet has approved a proposal to extend a three per cent interest subvention scheme to banks to ensure farmers get crop loans up to Rs 3 lakh at seven per cent a year interest. An additional subvention of three per cent would be given to those who pay loans on time, according to media reports.

The Cabinet approved the expenditure of Rs 18,110 crore for 2015-16 to enable the subvention scheme on short-term crop loans capped at Rs 3 lakh to farmers making timely repayments i.e. those repaying within one year of disbursal.

Of the total amount sanctioned, Rs 2,332 crore would be provided to Nabard and the remaining to commercial banks. The subvention will be applicable to those farmers who repay their amounts within one year of disbursal and it will be restricted to Rs 3 lakh of short-term crop loans. The subvention would also be applicable for post-harvest loans taken by small and marginal farmers against their negotiable warehouse receipts.

The Cabinet also approved Rs 374 crore for farmers with Kisan Credit Cards. The subvention would continue to be provided to farmers affected by natural calamities. The scheme was announced in the 2015-16 Union Budget. For 2015-16, the target of agriculture credit has been raised to Rs 8,50,000 crore, from Rs 8,00,000 in 2014-15. (SH)

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