Interest subvention to Public Sector Banks, Private Sector Banks, Cooperative Banks, Regional Rural Banks and NABARD for providing short term crop loan to farmers

No: --- Dated: Jul, 05 2016

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the Interest Subvention Scheme for farmers for the year 2016-17. The Government has earmarked a sum of Rs. 18,276 Crore for this purpose. This will help farmers getting short term crop loan payable within one year up to Rs. 3 lakhs at only 4% per annum. 

The salient features of the scheme are as follows: 

a) The Central Government will provide interest subvention of 5 per cent per annum to all farmers for short term crop loan upto one year for loan upto Rs. 3 lakhs borrowed by them during the year 2016-17. Farmers will thus have to effectively pay only 4% as interest. In case farmers do not repay the short term crop loan in time they would be eligible for interest subvention of 2% as against 5% available above. 

b) The Central Government will give approximately Rs 18,276 crores as interest subvention for 2016-17. 

c) In order to give relief to small and marginal farmers who would have to borrow at 9% for the post harvest storage of their produce, the Central Government has approved an interest subvention of 2% i.e an effective interest rate of 7% for loans upto 6 months. 

d) To provide relief to the farmers affected by Natural Calamities, the interest subvention of 2% will be provided to Banks for the first year on the restructured amount. 

e) In case farmers do not repay the short term crop loan in time they would be eligible for interest subvention of 2% as against 5% available above. 

Courtesy – Press Information Bureau, Government of India