The central govt. has approved the continuation of interest subvention to all banks including co-operative banks for providing short term crop loan to farmers, says New Indian Express.
This will enable banks to provide short term crop loans up to Rs 3 lakh to farmers at 7 per cent per annum during the year 2015-16, official sources said.
The government has also provided additional interest subvention of 3 per cent per annum to those farmers who repay on time (i.e. within one year of disbursement).
Union Finance Minister Arun Jaitley had allocated Rs 13,000 crore in the Budget for this scheme in the current fiscal, higher than Rs 9,476.71 crore set aside in last year’s Budget.
The govt. allowed the expenditure of Rs 18,110 crore as interest subvention for 2015-16, out of which Rs 15,778 crore will be used to subsidise loans given by state-run banks.
The remaining amount will be used by National Bank for Agriculture and Rural Development (Nabard) to refinance loans given by various banks including cooperative banks.
According to a govt. statement, ” to provide relief to farmers affected by natural calamities, the interest subvention of 2 per cent will continue to be available to banks for the first year on the restructured amount,” the statement said.
The subvention scheme will also cover small and marginal farmers having kisan credit cards for loans against warehouse receipts for post harvest at 7 per cent.
The govt asked banks to lend Rs 8.5 lakh crore to the agriculture sector in the current fiscal, against Rs 8 lakh crore a year ago.