Government Extends Interest Subvention Scheme for Agriculture Loans

The government has continued the interest subvention scheme for short-term loans up to Rs 3 lakh for agriculture and allied activities through Kisan Credit Card during the current financial year. The scheme offers a concessional interest rate of 7%, with an additional 3% subvention for prompt repayment. The Reserve Bank of India detailed the specific interest rates and conditions for various components of the loans.

The government has given the green light to extend the interest subvention scheme for short-term loans up to Rs 3 lakh for agriculture and allied activities, availed through the Kisan Credit Card (KCC), for the current financial year.

Farmers will benefit from a concessional interest rate of 7%, with an added interest subvention of 3% per annum for those who repay their loans on time. This means farmers who repay their loans promptly can get these short-term loans at a 4% interest rate per annum for the financial year 2024-25, according to the Reserve Bank of India (RBI).

The RBI circular also outlined that lending institutions will receive a rate of interest subvention of 1.5% for 2024-25. Priority will be given to the crop loan component for interest subvention and prompt repayment incentives, with remaining amounts considered for allied activities. To prevent distress sales, the interest subvention benefit will also extend up to six months post-harvest for small and marginal farmers. Additionally, relief measures for farmers affected by natural calamities will include specific interest subvention rates, with Aadhaar linkage mandatory for availing these loans.