New Delhi, Aug 18 (The South India Times): The Union Cabinet on Wednesday approved restoring the Interest Subvention on short-term agriculture loans to 1.5 percent for all financial institutions. Therefore, an Interest Subvention of 1.5% will be provided to lending institutions/ banks for the financial year 2022-23 to 2024-25 for lending short-term agri-loans up to Rs 3 lakh to the farmers, Union Minister Anurag Thakur said. The decision has been made to ensure adequate credit flow in the farm sector, the Minister added.
This increase in Interest Subvention support requires additional budgetary provisions of Rs 34,856 crore for the period of 2022-23 to 2024- 25 under the scheme, a Cabinet statement Minister said the increase in Interest Subvention will ensure the sustainability of credit flow in the agriculture sector as well as ensure said. financial health and viability of the lending institutions especially banks and Cooperative Banks, ensuring adequate agriculture credit in the rural economy. Banks will be able to absorb the increase in the cost of Regional Rural funds and will be encouraged to grant loans to farmers for short-term agriculture requirements and enable more farmers to get the benefit of agriculture credit.
This will also lead to the generation of employment since short-term Agri loans are provided for all activities including Animal Husbandry, Dairying, Poultry, and fisheries, the statement added. Farmers will continue to avail of short-term agriculture credit at an interest rate of 4% per annum while repaying the loan in time.
Ensuring hassle-free credit availability at a cheaper rate to farmers has been one of the priorities of the government. Accordingly, the Kisan Credit Card scheme was introduced for farmers to empower them to purchase agricultural products and services on credit at any time. To ensure that the farmers have to pay a minimal interest rate to the bank, the government introduced Interest Subvention Scheme (ISS), now renamed as Modified Interest Subvention Scheme (MISS), to provide short-term credit to farmers at subsidized interest rates. Under this scheme, a short-term agriculture loan up to Rs. 3.00 lakh is available to farmers engaged in Agriculture and other allied activities including Animal Husbandry, Dairying, Poultry, fisheries, etc. at the rate of 7 percent annum. An additional 3% subvention (Prompt Repayment Incentive – PRI) is also given to the farmers for prompt and timely repayment of loans.
Therefore, if a farmer repays his loan on time, he gets credit at the rate of 4% p.a. For enabling this facility to the farmers, the government provides Interest Subvention (IS) to the Financial Institutions offering this scheme. This support is 100 percent funded by the Centre, it is also the second largest scheme of DA&FW as per budget outlay and coverage of beneficiaries.
