The government has approved the continuation of an interest subsidy scheme for short-term loans up to Rs 3 lakh for agriculture and allied activities through the Kisan Credit Card (KCC) in the current financial year.
This scheme allows farmers to avail loans at a reduced interest rate of 7 percent.
Farmers who repay their loans on time also receive an additional interest subsidy of 3 percent per annum.
RBI’s Announcement on Interest Subvention
The Reserve Bank of India (RBI) stated that farmers who repay their loans on time will receive short-term crop loans
and loans for allied activities (such as animal husbandry, dairy, fisheries, beekeeping, etc.) at a lower interest rate of 4 percent per annum during the financial year 2024-25.
The RBI’s circular mentioned that lending institutions will receive a 1.5 percent interest subvention rate for the same period.
Additional Details
To discourage panic selling and encourage storage of produce in godowns, small and marginal farmers can avail the benefit of interest subvention under the KCC for up to six months after harvesting their crops.
Moreover, in case of farmers affected by natural calamities, the interest subvention rate applicable for the first year will be extended to banks on the restructured loan amount.
From the second year onwards, normal interest rates will apply on such restructured loans.
